OPEC+ Production Cuts Lead to Third Weekly Crude Gain
Crude oil saw a more than 6% increase last week, marking the third weekly gain, after OPEC+ members, including Russia, announced a new round of production cuts beginning in May. Brent crude dipped slightly to $85.09 a barrel, while U.S. West Texas Intermediate crude rose to $80.78.
Market Perspectives Vary Amid Tightening Oil Supply
ING's head of commodities research, Warren Patterson, noted that bearish investors question the demand outlook given the production cuts. In contrast, bullish investors see a tighter market in the year's second half. Patterson himself expects prices to continue rising throughout the year.
Iraq's Export Shutdown Adds to Supply Constraints
The supply situation has been further tightened due to the shutdown of Iraq's northern oil exports. Although Iraq's federal government and the Kurdish Regional Government agreed to restart oil flows last week, the process had continued as of Thursday.
U.S. Crude Inventories Drop, Suggesting Rising Demand
Support for oil prices also came from a larger-than-expected decrease in U.S. crude inventories last week and declines in gasoline and distillate stocks, indicating increased demand.
U.S. Inflation Data May Impact Investor Sentiment
A U.S. inflation report released on Wednesday could influence investor sentiment regarding interest rate trajectories. While the Federal Reserve may slow down rate hikes due to a recent banking crisis, borrowing costs could rise if inflation remains strong.
Vandana Hari, the founder of Vanda Insights, warned that strong U.S. economic data could lead to increased risk aversion. It would support expectations of the Fed continuing its tightening path, while weak numbers would signal economic distress.
