Oil prices increased more than 4% during the week ending March 5 as investor oversupply concerns were relieved by the OPEC+ output cut decision and positive outlooks among oil market influencers.
International benchmark Brent crude traded at $68.52 at 1149 GMT on Friday, posting a 4.30% increase from Monday when trade at 0710 GMT registered at $65.69 per barrel.
American benchmark West Texas Intermediate (WTI) traded at $65.43 at the same time on Friday, increasing 4.37% relative to $62.69 a barrel on Monday.
The first week of March started with major developments to boost oil prices, including US approval of a third COVID-19 vaccine and the House of Representatives passing the long-awaited US pandemic relief bill.
Amid rising tensions in the Middle East between Washington and Riyadh over US accusations against Saudi Crown Prince Mohammed bin Salman for the killing of Saudi journalist Jamal Khashoggi, and between Saudi Arabia and Yemen after the recent drone attacks by Yemeni rebels into Saudi soil, the security of supply was brought into question, increasing oil prices.
However, investors are now focusing on the outcome of the OPEC+ meeting on Thursday.
The group’s decision to keep the previous output cuts unchanged, except for Russia and Kazakhstan, was a timely move as it came when US crude oil inventories dropped to their lowest level since 1982. Inventories were impacted by production disruptions by as much as 65% in Texas, which experienced one of its coldest winters in decades, causing major blackouts and refinery production halts.
A better and balanced oil market outlook prevails among the industry influencers, as demand is forecast to recover in 2021 and supply is under the control of Saudi Arabia’s adamant production policy.
Predicting that global demand will increase year-on-year by 6.3 million barrels per day (bpd) in 2021, global energy consultancy Wood Mackenzie forecasts a rise in crude oil prices toward $70-$75 per barrel in April boosted by the decision taken by OPEC+ to roll over output cuts in April.
By Sibel Morrow