ADVANCES MOVERS
After Saudi Arabia and its OPEC+ allies unexpectedly announced a round of production cuts last weekend, oil futures remained close to unchanged early Thursday, staying on pace to conclude a holiday-shortened week with strong gains. Most American markets will be halted on Good Friday.
Price movement:
On the New York Mercantile Exchange, West Texas Intermediate oil for May delivery dropped 2 cents, or less than 0.1%, to $80.59 per barrel, setting the American benchmark up for a 6.5% weekly gain.
The international standard for crude oil, June Brent, was steady at $84.99 per barrel and was on pace to rise 6.4% for the week.
Back on the Nymex, gasoline for May was unchanged at $2.821 per gallon, while heating oil for May decreased 0.3% to $2.722 per gallon. The price of natural gas in May increased 0.6% to $2.169 per million BTUs. Crude prices, the market’s primary driver, are maintaining their advances.
following last weekend’s announcement by Saudi Arabia and a small number of other producers of production cuts that would jointly remove 1.15 million barrels per day of production from the market starting in May and continuing through the end of the year. Additionally, Russia announced that it would continue to reduce 500,000 barrels per day until the end of the year. The Organization of the Petroleum Exporting Countries (OPEC) and its partners, including Russia, make up OPEC+.
While analysts cautioned that the output cuts may also reflect worries about the demand for crude as concerns about interest rate increases by the Federal Reserve and other major central banks continue, several Wall Street banks have raised their oil price forecasts.
Bottom line: With OPEC+’s announced output cut, which they claimed was intended to regain control of the markets and scare away speculators, the basic dynamics of the oil market changed this week, according to analysts at Sevens Report Research in a note published on Thursday.
However, they added, “OPEC+ may anticipate a decline in demand amid recessionary pressures, and if that proves to be the case, it will likely be the first of numerous output cuts as global demand would fall sharply in a recession and oil prices would almost certainly follow suit, depending, of course, on the response by global producers to easing demand.
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