Oil Prices Surge in Anticipation of OPEC+ Supply Decision

On Friday, oil prices experienced a notable increase, with investors poised for weekly gains as they awaited a critical decision from OPEC+ regarding supply agreements for the upcoming second quarter. This anticipation comes amid the evaluation of new economic data from the U.S., Europe, and China.

Brent futures for May climbed $1.43, marking a 1.75 percent rise, to settle at $83.34 a barrel by midday GMT. The April contract for Brent closed on the previous day at $83.62 a barrel. Meanwhile, U.S. West Texas Intermediate (WTI) for April ascended by $1.54, or 1.97 percent, reaching $79.80 a barrel. This uptrend positions WTI for a 4.3-percent weekly increase, while Brent is poised for a 2.1-percent rise compared to last week’s closing price.

The oil market’s focus is squarely on OPEC+ and its forthcoming decision on whether to extend the voluntary production cuts that have been in place. Analysts suggest that maintaining these cuts through the end of the year would send a strong, positive signal to the market. However, an extension merely into the second quarter might not significantly impact prices as it may already be anticipated by investors.

The Organization of the Petroleum Exporting Countries (OPEC) reportedly pumped 26.42 million barrels per day in February, an increase from January. Market optimism is also buoyed by expectations that Saudi Arabia will maintain stable crude prices for its Asian customers in April, mirroring March levels.

On the demand side, concerns are evident with Chinese manufacturing activity contracting for the fifth consecutive month in February. Additionally, the Eurozone witnessed a dip in inflation in February, slightly missing analysts’ expectations. In contrast, the U.S. saw its personal consumption expenditures index for January align with economic forecasts, fueling speculation of a potential interest rate cut in June.

This complex interplay of supply decisions, economic indicators, and geopolitical factors continues to shape the global oil market, highlighting the intricate balance between production policies and demand dynamics.