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Crude oil futures rose on Friday and throughout the week, with WTI crude climbing above $80 a barrel before paring gains to close at the highest closing price since November amid rising tensions in the Middle East and by expectations that OPEC will extend production cuts. in Q2.
Hopes for a ceasefire in Gaza suffered a setback when an attack by Israeli forces on Thursday reportedly killed more than 100 Palestinians waiting for food aid, including many trampled in the crush.
OPEC+ countries are considering an extension of cuts, which amount to 2.2 million barrels a day, into the second quarter and possibly until the end of the year, Reuters reported earlier this week, adding that a decision is expected in the first week of March.
Increased non-OPEC supply and lingering concerns about the Chinese demand outlook have held back oil’s rally, but “$80 has been a psychological level for crude, and holding this level could provide positive momentum,” he said Rebecca Babin of CIBC Private Wealth at Bloomberg.
Front-month Nymex crude (CL1:COM) for April delivery is out +2.2% Friday at $79.97 a barrel, after hitting $80 for the first time since early November and then settling at its best value since Nov. 6, while May Brent crude (CO1:COM) closed +2% at 83.55 dollars a barrel; Over the course of the week, WTI jumped 4.5% and Brent gained 3.4%.
Meanwhile, Nymex April Natural Gas (NG1:COM) closed the week up 8% at $1.835/MMBtu, breaking a four-week losing streak.
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“Sticking to voluntary production cuts until the end of the year would be a strong signal and should therefore be seen as positive for prices,” although an extension is likely only priced into the second quarter and should not move prices significantly. significant, Commerzbank analyst Carsten Fritsch said.
After announcing an extension of current cuts in the coming days, OPEC+ is likely to gradually add new barrels to the market at its next ministerial meeting on June 1, JP Morgan’s Christyan Malek said, as a recovery in production “after a long period of cuts represents a turning point for oil markets, as this should indicate strong future demand.”
The oil market is “well balanced”, with prices well supported around $70 and a path towards $80 in sight if “OPEC+ confirms the rollover of its cuts and once the [U.S. Federal Reserve] it clarifies the timeframe for tariff cuts,” Manish Raj of Velandera Energy Partners told Marketwatch.
The oil and gas sector, represented by the Energy Select Sector SPDR ETF (NYSEARCA:XLE), Closed +1.3% for the week.
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Source: Barchart.com