Oil posted a third straight weekly gain after a surprise supply cut by OPEC+ and a drop in US inventories hardened the market outlook.
Prices rose the most this year on Monday, up 6.3%, after the Organization of the Petroleum Exporting Countries and its allies decided to cut more than 1 million barrels of daily output from may Since then, Saudi Arabia has raised prices for all of its oil sales to customers in Asia.
Crude has risen 26% since its intraday low hit in mid-March, when banking turmoil sparked a flight from risk assets. Prices were already recovering amid growing Chinese fuel demand and a weakening US dollar when OPEC+ intervened, confusing short sellers and amplifying the bounce.
Meanwhile, geopolitical tensions in the Middle East are easing as top diplomats from Saudi Arabia and Iran meet to continue mending relations, de-escalating a decades-old rivalry that has fueled proxy wars and shook the oil markets.
Adding to the supply squeeze, US crude stockpiles sank 3.7 million barrels last week, and gasoline and distillate inventories also fell. Despite the fundamental picture, traders will continue to look to US economic data for further clues about recession risks and interest rate hikes by the Federal Reserve.
“Physical OPEC+ crude oil cuts will collide with central bank hikes designed to curb demand, posing a macro risk,” Francisco Blanch, an analyst at Bank of America Corp., said in a note to the customers “Net, we stay constructive.”
Prices:
- WTI for May delivery rose 9 cents to settle at $80.70 a barrel in New York.
- Brent for June settlement rose 13 cents to $85.12 a barrel.
NOTE: There will be no Brent and WTI futures trading on Friday due to a public holiday
