Oil jumps on tighter supply outlook
NEW YORK: Oil prices rose by more than $1 a barrel on Thursday, after falling for two consecutive sessions, on the prospect of supplies given the Opec+ producer alliance is widely expected to stay the course on its current production cuts.
Brent crude futures for May were up $1.30, or 1.5pc, at $87.39 a barrel at 1:28pm EDT (1728 GMT). The more actively traded June contract rose $1.22, or 1.4pc, to $86.43 at 1:28pm The May contract expires on Thursday.
US West Texas Intermediate (WTI) crude futures for May delivery were up $1.43, or 1.8pc, at $82.78 a barrel.
Both benchmarks were up more than 2pc on the week and were on track to finish higher for a third consecutive month.
In the prior session, oil prices had come under pressure from last week’s unexpected rise in US crude oil and gasoline inventories, driven by an increase in crude imports and sluggish gasoline demand, according to Energy Information Administration data.
However, the crude stock increase was smaller than the build projected by the American Petroleum Institute, and analysts noted the increase was lower than expected for the time of year.
“We... expect US inventories to rise less than normal in reflection of a global oil market in a slight deficit,” SEB analyst Bjarne Schieldrop said. “This will likely hand support to the Brent crude oil price going forward.” US refinery utilisation rates, which rose 0.9 percentage point last week, also supported prices.
The US economy, meanwhile, grew faster than previously estimated in the fourth quarter. Gross domestic product increased at a 3.4pc annualised rate from the previously reported 3.2pc pace, the Commerce Department’s Bureau of Economic Analysis said.
“The strength in the stock market suggests strong forward earnings that are, in turn, hinting at a surprisingly strong US economy conducive toward better than expected energy product demand,” said Jim Ritterbusch of energy consultancy Ritterbusch and Associates.
Published in Dawn, March 29th, 2024