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Business News/ Markets / Commodities/  Oil reports weekly gain as traders await OPEC+ quarterly supply decision; Brent settles 2% higher at $83/bbl
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Oil reports weekly gain as traders await OPEC+ quarterly supply decision; Brent settles 2% higher at $83/bbl

For the week, Brent benchmark added around 2.4 per cent following the switch in contract months, while WTI gained more than 4.5 per cent.

Brent futures for May settled $1.64 higher, or two per cent, at $83.55 a barrel.Premium
Brent futures for May settled $1.64 higher, or two per cent, at $83.55 a barrel.

Oil prices rose two per cent in the previous session and posted weekly gains as traders awaited the supply agreements decision for the second quarter  by the Organisation of Petroleum Exporting Countries and it allies (OPEC+) while also weighing fresh US, European and Chinese economic data.

Brent futures for May settled $1.64 higher, or two per cent, at $83.55 a barrel. The April Brent futures contract expired on February 29 at $83.62 a barrel. US West Texas Intermediate (WTI) for April rose $1.71, or 2.19 per cent, to $79.97 a barrel. For the week, Brent added around 2.4 per cent following the switch in contract months, while WTI gained more than 4.5 per cent, according to news agency Reuters.

Also Read: US sanctions threaten Russian oil sales to India; complicate process for OMCs to secure annual deals: Report

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a March 19 expiry, last settled 0.02 per cent lower at 6,637 per bbl, having swung between 6,475 and 6,694 per bbl during the session, against a previous close of 6,638 per barrel.

What's driving crude oil prices?

-A decision on extending OPEC+ cuts is expected in the first week of March, with individual countries expected to announce their decisions. Analysts said that the expectation that OPEC+ is going to continue with their voluntary production cuts well into the second quarter of 2024. 

-Sticking to the voluntary production cuts until the end of the year would be a strong signal and should therefore be seen as price-positive, according to analysts. A Reuters survey showed the OPEC pumped 26.42 million barrels per day (bpd) in February, up 90,000 bpd from January.

-Strong expectations of Saudi Arabia keeping term prices of crude it sells to Asian customers little changed in April from March levels also underpinned the market on Friday. Meanwhile, geopolitical tension in the Red Sea also lifted prices on Friday.

-US energy firms added oil and natural gas rigs for a second straight week, energy services firm Baker Hughes, opens new tab said in its closely followed report on Friday. The oil rig count, an early indication of future output, rose by three to 506 this week, the highest since September.

Also Read: Government marginally raises windfall tax on domestic crude oil today

-On the demand side, Chinese manufacturing activity shrank for the fifth straight month in February, an official survey showed. Euro zone inflation fell in February according to Eurostat, but both the headline figure and core inflation, which strips out volatile food and fuel prices, just missed analysts' expectations.

-Supporting prices, the US personal consumption expenditures (PCE) index showed January inflation in line with economists' expectations on Thursday, reinforcing market bets for a June interest rate cut. Money managers raised their net long US crude futures and options positions in the week to February 27, said the US Commodity Futures Trading Commission (CFTC).

Where are prices headed?

Crude oil exhibited significant volatility, retracting from its peaks following a rebound in the dollar index. The economic data from the US, released on Thursday, aligned mostly with expectations, mitigating concerns over escalating inflation. 

January saw a surge in US personal income, exceeding forecasts, which bolstered oil prices. However, an unexpected decline in personal spending and an increase in jobless claims curtailed gains in oil prices. Nonetheless, ongoing tensions in the Red Sea and between Russia and Ukraine are underpinning oil prices, according to analysts.

‘’Crude oil prices managed to secure gains for the second consecutive month in February. Prices are anticipated to continue their volatile trajectory. Crude oil is supported at $77.30–$76.70, with resistance observed at $78.90-$79.60. In terms of the INR, crude oil finds support at 6,440-6,350, while resistance lies at 6,590-6,680,'' said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

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Published: 02 Mar 2024, 07:33 PM IST
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