International oil prices rebounded and rose by more than $1 per barrel on Thursday, March 28, after falling for two consecutive sessions ahead of the Organization of the Petroleum Exporting Countries (OPEC) policy decision. Investors anticipated tighter supplies as the producer alliance is widely expected to stay the course on its current output cuts.
Brent crude futures for May were last up $1.21, or 1.4 percent, at $87.30 a barrel, while the more actively traded June contract rose $1, or 1.2 percent, to $86.41. The May contract expires on Thursday. U.S. West Texas Intermediate (WTI) crude futures for May delivery rose $1.28, or 1.6 percent, at $82.63 a barrel.
Both benchmarks rose more than two percent for the week and were on track to finish higher for a third straight month, according to Reuters news agency. Coming to domestic prices, crude oil futures traded 1.76 percent higher at ₹6,895 per barrel on the multi-trade exchange (MCX).
What pushes oil prices?
-In the previous session, oil prices were suppressed by last week’s unexpected rise in US crude oil and gasoline inventories, driven by an increase in crude imports and sluggish gasoline demand, according to data from the Energy Information Administration (EIA).
-Analysts expect inventories to rise less than normal due to the reflection of the global oil market in a slight deficit. This is likely to provide support to Brent crude oil prices going forward. The use of US refinery tariffs, which rose 0.9 percentage points last week, also supported prices.
-The US economy, meanwhile, grew faster than previously estimated in the fourth quarter. The Gross Domestic Product (GDP) increased at a 3.4 percent annual rate from the previously reported 3.2 percent pace, the Commerce Department’s Bureau of Economic Analysis said.
-Investors will pay attention to indications from a meeting next week of the Joint Monitoring Ministerial Committee of OPEC. Increased geopolitical risk has raised expectations of a potential supply disruption, but OPEC is unlikely to make any oil production policy changes until a full ministerial meeting in June.
-Analysts see no indication that the recent rise in prices due to increased Russian infrastructure risk will prompt any policy reversal at next week’s OPEC meeting. Any serious change will likely have to wait until the ministerial meeting on June 1, and even then, experts say the group will be very cautious when it comes to resolving any cuts.
Where are the prices going?
Analysts said crude continued to trade firm despite a bigger-than-expected build in weekly crude oil and gasoline inventories, as sentiment remained supported by further supply cuts from Russia in line with the promised OPEC+ cuts.
” Also sentiments still remain optimistic due to geopolitical risk prevailing in the market. ”Technically, trend remains positive till support at 6,750/ 6,690 is not broken, while on the higher side resistance is seen at 6,920,” said Pranav Mer, Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd.
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Published: 28 Mar 2024, 22:30 IST