Energy
Wednesday, April 3rd, 2024 7:43 pm EDT
Key Points
- Crude oil futures experienced gains driven by mounting geopolitical tensions and OPEC+ policy decisions. The West Texas Intermediate (WTI) contract for May delivery rose by 0.33% to settle at $85.43 a barrel, while the Brent contract for June delivery increased by 0.48% to settle at $89.35 a barrel, marking their highest levels since late October.
- OPEC and its allies, known as OPEC+, are voluntarily reducing production by 2.2 million barrels per day through at least the second quarter, aiming to stabilize oil prices. However, the group’s Joint Ministerial Monitoring Committee concluded a meeting without recommending changes to the current production policy, indicating ongoing support for the agreed-upon cuts.
- Despite the rise in oil prices, there was a setback due to a build in U.S. crude stockpiles, which increased by 3.2 million barrels last week, as reported by the Energy Information Administration. This build in inventories counteracted some of the upward pressure on oil prices caused by geopolitical tensions and OPEC+ policies.
Crude oil futures maintained recent gains on Wednesday, buoyed by escalating geopolitical tensions and the continued policy of voluntary production cuts by OPEC+ members. The West Texas Intermediate (WTI) contract for May delivery edged up by 0.33% to settle at $85.43 a barrel, while the Brent contract for June delivery rose by 0.48% to settle at $89.35 a barrel, reaching their highest levels since late October. OPEC+ countries, including Russia, are voluntarily cutting production by 2.2 million barrels per day through at least the second quarter. However, the group’s Joint Ministerial Monitoring Committee concluded its meeting without recommending changes to the current production policy. Despite this, the oil price increase was tempered by a build in U.S. crude stockpiles, which saw a rise of 3.2 million barrels last week, as reported by the Energy Information Administration.
The surge in oil prices was supported by Bank of America’s projections of an impending deficit in the oil market, with expectations of improving economic growth leading to a 450,000 barrel per day shortfall in the second and third quarters. Geopolitical tensions further fueled the rally in crude prices, with Ukraine conducting drone strikes on Russian energy infrastructure and Iran vowing retaliation against Israel for alleged attacks on its consulate in Damascus, resulting in casualties among Islamic Revolution Guards Corps officials. The mounting tensions between Israel and Iran have reignited concerns about a broader conflict in the Middle East, raising fears of potential disruptions to crude supplies. Overall, these geopolitical factors, coupled with ongoing production cuts by OPEC+ nations, have contributed to the recent upward momentum in crude oil futures.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/04/03/crude-oil-prices-today.html
