Trading Oil Price: Brent at $87.29, WTI Hit $83.48

Trading Oil Price: Brent at $87.29, WTI Hit $83.48

Key Points:

  • Brent crude rose by 29 cents to $87.29 a barrel, marking a 0.3% increase.
  • S. West Texas Intermediate crude saw a 0.4% rise, up 31 cents to $83.48 a barrel.
  • Both benchmarks concluded March higher, extending their winning streak to three months.

In the volatile world of trading oil, the start of the week saw a modest price uptick, continuing a trend of resilience amid fluctuating global dynamics. Brent crude climbed by 29 cents, or 0.3%, to $87.29 a barrel in early GMT trading, continuing its 2.4% increase from the previous week. Similarly, US West Texas Intermediate crude rose by 31 cents, or 0.4%, reaching $83.48 a barrel, after experiencing a 3.2% gain last week. Despite Easter holiday closures reducing trade volumes in many countries, oil prices still rose, illustrating market sensitivity to participation rates.

Summer Demand Surge: OPEC+ Tightens the Reins

OPEC+ and its allies, significantly impacting oil market trends, strategically navigate supply, influencing global prices and economic landscapes. Their recent commitment to prolong production cuts until the end of June may constrict crude supply, particularly during the Northern Hemisphere’s summer when demand typically spikes. This strategic move, aimed at stabilising prices, has placed trading oil at the forefront of investors’ minds, especially as the geopolitical landscape remains uncertain.

Russia Adapts: Cuts Output Amid Ukraine Tensions

Further complicating the global oil supply are the developments in Russia. The country’s Deputy Prime Minister, Alexander Novak, revealed a strategic shift, with a new focus on reducing output instead of prioritising exports during the second quarter. This decision aims to distribute production cuts among OPEC+ members; however, the Ukrainian drone attack may reduce Russia’s fuel exports. Consequently, with 1 million barrels per day of Russian crude impacted, global high-sulphur fuel oil markets face significant repercussions.

Global Trading Oil: Demand Up in Europe, China’s Rebound

On the demand side, Europe showed resilience with a 100,000 bpd increase year-on-year in February, defying expectations of a contraction. In the US, crude production dipped 6% in January from December’s record highs, largely due to adverse weather conditions. Conversely, China’s rebound in manufacturing activity in March, the first in six months, suggests bolstering oil demand, counterbalancing the fluctuating supply dynamics.

Analysts Forecast Strong Oil Demand into 2024

Notable forecasts from industry analysts underscore the complex interplay of factors influencing oil markets. Energy Aspects highlighted strong demand fundamentals and geopolitical risks to crude supply, painting a cautiously optimistic outlook. Goldman Sachs analysts highlight Europe’s firm demand, US supply softness, and possible OPEC+ cut extension through 2024 as market drivers.