Oil Prices Surge on US Inventory Declines
Oil prices rose on Wednesday, buoyed by a combination of factors
that have led to increased expectations of U.S. crude inventory declines
as well as the latest output cut targets set by the OPEC+ producer alliance.
Topics
Crude Oil Inventory Declines
Analyzing OPEC+ Production Cuts
Global Supply and demand equation
Crude Oil Inventory Declines
Brent crude futures gained 45 cents, or 0.5%, to $85.39 a barrel by 0352 GMT,
while West Texas Intermediate U.S. crude was up 40 cents, or 0.5%, to $81.11 a barrel.
The rise in oil prices can be attributed to the expectations of crude inventory declines in the U.S.,
which has a significant impact on global oil prices.
There have been reports suggesting that crude inventories have been dropping,
indicating a strong demand for oil in the U.S. This has led to positive market sentiment, boosting prices.
In addition, the OPEC+ producer alliance, which includes key players
such as Saudi Arabia, Russia, and other major oil producers, recently announced new output cut targets.
This move is expected to help balance the global oil supply and demand equation,
which has been affected by the Russian/Ukraine war.
Overall, the rise in oil prices is good news for the oil industry,
which has been facing significant challenges in recent times.
Analyzing OPEC+ Production Cuts
It is hoped that this trend will continue and that the industry will be able to recover from the impact of the war.
As with any commodity, oil prices are subject to fluctuations due to a variety of factors.
The market will continue to monitor developments closely, and any news of significant changes will have an impact on prices.
Global oil prices have risen on expectations of a decline in crude inventory in the U.S. and output cut targets set by the OPEC+ producer alliance.
The industry report showed that U.S. crude stocks fell by roughly 4.3 million barrels in the week ended March 31.
Traders are still analyzing OPEC+ surprise production cuts,
which are expected to help balance the global oil supply and demand equation affected by the pandemic.
The OPEC+ plan would bring the total volume of cuts by the group to 3.66 million barrels per day (bpd),
including a 2 million bpd cut last October, which is equal to about 3.7% of global demand.
Although Japan’s service sector grew at the fastest rate in March,
weak manufacturing activity in China and the U.S. has kept oil prices from moving up further,
despite the promise of tighter supply following the OPEC+ cuts.
Traders will be closely monitoring the U.S. non-farm payrolls data due later this week for cues on broader economic trends.
Global Supply and demand equation
Analysts predict that this data will likely be the most influential economic indicator that drives broad market movements,
as per Tina Teng, an analyst at CMC Markets.
The oil prices rose on expectations of a decline in the U.S. crude inventory and output cut targets set by OPEC+.
Brent crude futures gained 0.5% to $85.39 a barrel,
while West Texas Intermediate U.S. crude was up by 0.5% to $81.11 a barrel.
An industry report showed that U.S. crude stocks fell by about 4.3 million barrels in the week ended March 31,
and the official inventory report by the U.S. Energy Information Administration is due later today.
The latest targets to reduce supplies set by OPEC+ are expected
to help balance the global supply and demand equation.
Edward Moya, an analyst at OANDA, said that any news that suggests
the oil market will remain tight is going to send prices even higher.