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Oil hits almost 14-month high after OPEC+ extends output cuts

Published 03/04/2021, 08:52 PM
Updated 03/05/2021, 05:40 AM
© Reuters. FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub in Cushing

© Reuters. FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub in Cushing

By Noah Browning

LONDON (Reuters) - Oil prices jumped more than 2% on Friday, hitting their highest in nearly 14 months after OPEC and its allies agreed not to increase supply in April as they await a more substantial recovery in demand.

Brent crude futures were up $1.52, or 2.3%, at $68.26 a barrel by 1008 GMT and U.S. West Texas Intermediate (WTI) crude futures climbed $1.30, or 2%, to $65.13 as both remained on track for weekly gains.

Both contracts surged more than 4% on Thursday after the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, extended oil output curbs into April, granting small exemptions to Russia and Kazakhstan.

"OPEC+ settled for a cautious approach ... opting to increase production by just 150,000 barrels per day (bpd) in April while market participants looked for an increase of 1.5 million bpd," said UBS oil analyst Giovanni Staunovo.

Investors were surprised that Saudi Arabia had decided to maintain its voluntary cut of 1 million bpd through April even after the oil price rally of the past two months on the back of COVID-19 vaccination programmes around the globe.

"An array of factors coalesced to bring the parties together, but the resultant price increase will almost certainly push the parties to change their minds when they meet again on April 1," Citigroup (NYSE:C) said in a note.

Analysts are reviewing their price forecasts to reflect the continued supply restraint by OPEC+ as well as U.S. shale producers, who are holding back spending to boost returns to investors.

© Reuters. FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub in Cushing

Goldman Sachs (NYSE:GS) raised its Brent crude price forecast by $5 to $75 a barrel in the second quarter and $80 a barrel in the third quarter of this year. UBS raised its Brent forecast to $75 a barrel and WTI to $72 in the second half of 2021.

Latest comments

Strange that reuters mention nothing abou the the brewing tension and attacks in the middle east.
CRUDE: still dirt cheap. Goldman's STARTING TO see it :)
Strange how a democrat is the oil/industrial King.  Investors weren't flocking to it like they are now with Trump, that's for sure.
Not really. There is trouble in the middle east and the media does not report the truth
I admire Saudis. Looking far forward, deep pocket players who showed and strengthened their leadership in OPEC+. If vaccination is effective, oil will top $100 by EOY.
 They use their power and they know how to use it. Same as US.
They are really good at blowing things up
10$ by this summer
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