[ 2021-03-06 ]

Oil prices surges after OPEC+ holds cuts
Oil prices jumped about 3% on Friday, hitting
their highest levels in more than a year,
following a stronger-than-expected U.S. jobs
report and a decision by OPEC and its allies not
to increase supply in April.

Brent futures rose $2.62, or 3.9%, to settle at
$69.36 a barrel. The session high for the global
benchmark was its highest since January 2020.

U.S. West Texas Intermediate (WTI) crude rose
$2.26, For the week, Brent gains 5.2% gain, WTI up
7.4%or 3.5% to settle at $66.09 a barrel.

For the week, Brent was up 5.2%, rising for a
seventh week in a row for the first time since
December, while WTI was up about 7.4% after
gaining almost 4% last week.

Both contracts surged more than 4% on Thursday
after the Organization of the Petroleum Exporting
Countries and allies, together known as OPEC+,
extended oil output curbs into April, granting
small exemptions to Russia and Kazakhstan.

“OPEC+ settled for a cautious approach ...
opting to increase production by just 150,000
barrels per day (bpd) in April while market
participants looked for an increase of 1.5 million
bpd,” said UBS oil analyst Giovanni Staunovo.

Investors were surprised that Saudi Arabia had
decided to maintain its voluntary cut of 1 million
bpd through April even after the oil price rally
of the past two months on the back of COVID-19
vaccination programs around the globe.

Some forecasters revised their price expectations
upward following the OPEC+ decision.

Goldman Sachs raised its Brent crude price
forecast by $5 to $75 a barrel in the second
quarter and $80 a barrel in the third quarter of
this year. UBS raised its Brent forecast to $75 a
barrel and WTI to $72 in the second half of 2021.

In addition, the market got a boost after a report
showed the U.S. economy created more jobs than
expected in February.

The nonfarm payroll report “shows that Americans
are closer to pre-pandemic behavior that will
drive strong demand for crude,” said Edward
Moya, senior market analyst at OANDA in New York.

Traders also noted the rising dollar, which hit
its highest since November, was limiting the gain
in crude prices. A stronger dollar makes oil more
expensive for holders of other currencies.

However, analysts and traders have said that slow
physical crude sales and recovery for demand not
predicted until around the third quarter suggest
that the price rally is unwarranted.

“The market suggests a tightness that does not
exist. Therefore, we continue to believe that the
price risk is mainly downward and that the current
price is overshooting,” said Hans van Cleef,
senior energy economist at ABN Amro.

India, the world’s third-biggest oil importer
and consumer, said that the OPEC+ decision to
extend cuts as prices move higher could threaten
the consumption led-recovery in some countries.

The recovery in oil prices to pre-pandemic levels
has also spurred U.S. oil drillers to return to
the well pad. The oil rig count rose by one this
week after rising for six straight months,
according to energy services firm Baker Hughes Co.

Source - Ghanaweb

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