Oil rose above $81 a barrel, boosted by general risk-on sentiment, as the first of a series of supply and demand projections due this week forecast a modest rise in US output.
Crude held on to gains even after a U.S. Energy Information Administration report on Tuesday estimated supply will outpace demand over the next two years, despite an unexpected OPEC+ production cut .
The Organization of the Petroleum Exporting Countries and the International Energy Agency are also scheduled to issue monthly reports later this week.
Despite the bearish government report, key market metrics point to renewed strength following production cuts announced by OPEC+. The December-December spread – the difference between futures for the last month of this year and 2024 – rose to more than $5 a barrel, from $2.53 three weeks ago.
“The oil market is going to remain tight and while China’s reopening has disappointed, they will do much better going forward and that should keep prices supported,” said Ed Moya, senior market analyst at ‘Oanda.
Prices:
- WTI for May delivery was up $1.79 at $81.53 a barrel in New York
- Brent for June settlement was up $1.43 at $85.61
Russia’s marine oil exports plunged last week, which could further tighten markets. Nearly half a million barrels a day of crude supplies from Iraq’s semi-autonomous Kurdistan region also remain halted, and there are signs that further negotiations will be needed before those flows can resume.
