1 min read.Updated: 05 Apr 2021, 06:49 AM ISTBloomberg
Crude has surged this year as the roll-out of coronavirus vaccines paves the way for the reopening of economies, and the decision by the Organization of Petroleum Exporting Countries and its allies was seen as a vote of confidence in the outlook
Oil futures eased in early Asian trading after OPEC+ decided to boost production over the coming months and Saudi Arabia raised prices for shipments to customers in its main market of Asia.
West Texas Intermediate dipped 0.4%, paring the 3.9% gain seen on Thursday, when the alliance decided to loosen its supply curbs gradually. The grouping will raise production by more 1 million barrels a day in stages between May and July, and over the same period, Saudi Arabia will roll back its voluntary 1-million-barrel-a-day reduction. Markets were closed on Friday for a holiday.
Crude has surged this year as the roll-out of coronavirus vaccines paves the way for the reopening of economies, and the decision by the Organization of Petroleum Exporting Countries and its allies was seen as a vote of confidence in the outlook. Reinforcing the signs that top economies are on the mend, the US added more than 900,000 jobs in March. That bodes well for oil demand.
Before Thursday’s meeting, the cartel had been expected to maintain its cautious stance by rolling over current cuts. Yet Saudi Arabia and its allies showed they are more convinced now that demand is on a firmer footing. Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ was “testing" the market, and can reverse course if necessary at its next gathering on April 28.
Separately, Saudi Arabia raised prices for shipments to customers in Asia. Saudi Aramco, the state energy firm, will increase its grades to the region in May by between 20 and 50 cents a barrel, according to a statement.
Progress in combating the pandemic remains mixed, with an accelerating pace of vaccinations in the US contrasting with renewed curbs elsewhere, especially in Europe. In France, cases have surged due to more contagious variants, forcing a third lockdown. In India, Mumbai authorities asked all private offices to work from home this month after a new wave of infections.
Brent’s prompt timespread was 36 cents in backwardation. That’s a bullish pattern -- with near-term prices trading at a premium to those further out -- and it’s up from 6 cents last Monday.