Brent crude rose to briefly surpass $86 a barrel, marking its highest level since November, before retreating slightly on Monday. The escalation of Ukraine’s attacks on Russian energy infrastructure has driven this volatility.
Brent crude futures for May delivery rose 51 cents to $85.85 a barrel by 1333 GMT. At the same time, the April contract for US West Texas Intermediate (WTI) crude climbed 62 cents to $81.66.
Business activity was slow, due to the imminent expiration of the April contract. Meanwhile, the more active May delivery contract saw an increase of 60 cents, trading at $81.18.
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“Crude oil remains in a positive trend with Brent crude holding firm above $85 per barrel and WTI crude oil above $81, with support from better than expected Chinese data on industrial production and fixed investments, while the possibility of supply problems from the Middle East and Higher demand ratings are seen keeping sentiments bullish,” said Pranav Mer, VP – Research (Commodities & Currency) BlinkX and JM Financial.
What weighs on crude oil prices?
- Market participants indicated that Russia plans to boost oil exports through its western ports in March by nearly 200,000 barrels per day (bpd), despite refinery outages, to a monthly total of 2.15 million bpd.
- Iraq announced on Monday its intention to reduce crude exports in the coming months by more than 100,000 barrels per day compared to levels of the previous month. This reduction is intended to offset any increase above its OPEC+ quota recorded in January and February. Iraq adheres to voluntary cuts established with the OPEC+ coalition of oil-exporting nations, which were extended until the second quarter.
- The combination of Russian outages and prolonged OPEC+ output cuts prompted Morgan Stanley to revise its Brent price projections up $10 per barrel, now forecasting $90 for the third quarter of 2024. The past week saw both oil contracts experience gains, reaching their maximum levels since then. November, partly prompted by the fourth upward adjustment of its demand forecast for 2024 by the International Energy Agency since November.
- This week, the main focus is on the future of monetary policy in major economies, as many central banks have kept interest rates elevated for an extended period to combat persistent inflationary pressures. Reduced interest rates could boost demand in the United States, the largest consumer of oil worldwide, boosting oil prices.
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Published: 18 Mar 2024, 21:17 IST