(MENAFN- Baystreet) The recent rally in oil prices is pushing the benchmarks towards a quarter of gains thanks to the OPEC+ output cuts.
WTI, according to Bloomberg, has added 14% since the start of the year, topping $82 per barrel earlier this week. Brent crude has gone from around $78 per barrel at the start of the year to over $86 per barrel this week.
What's interesting in the latest movements in oil is that prices earlier today moved up despite the Energy Information Administration reporting an estimated build in crude oil stocks for the latest week, as well as another one in gasoline.
Normally, these builds would be taken as signals of weaker demand but it seems traders are not taking these signs literally this time and are buying more oil instead of selling.
The anticipation of rate cuts, especially in the United States, is also acting as support for prices as lower rates stimulate stronger demand for crude. The first rate cut by the Fed is expected in June although the Fed itself has not set any date for it.
JP Morgan analysts pointed to Russia's decision to impose additional curbs on production, suggesting this could lift prices further and soon.
“Russia's actions could push Brent oil price to $90 already in April, reach mid-$90 by May and close to $100 by September,” they wrote in a note, as quoted by Investing.
The prediction probably assumes that the rest of OPEC+ will continue producing less oil, too, as signaled repeatedly by cartel officials. OPEC is meeting again next week and expectations are that it will leave its production policy unchanged.
On the demand side, meanwhile, the picture is one of strength.“Demand conditions remain firmer than expected in the US and China,” Standard Chartered analyst Han Zhong Liang told Bloomberg. Especially in China, demand is looking“increasingly positive following recent data releases.” The latest from the world's number-one oil importer is higher industrial profits suggesting economic growth is gathering momentum.
By Irina Slav for Oilprice
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