Oil Prices Gain Upside On Supply Risk

last updated on

Oil Prices Gain Upside On Supply Risk

Oil Prices Gain $1 Upside On Supply Risk

An upside of $1 was seen in the prices of WTI and Brent crude oil on Friday. It appears that the oil market is driven by the supply risks and the Russia-Ukraine situation.

The Brent crude closed the day near $91.17 with a gain of around 0.57% ($0.52). Similarly, the WTI gained 0.37% and was trading at $86.91.

Oil Up By 4% On Weekly Timeframe

Both of the oil benchmark indexes are now sitting at their highest levels, only seen during October 2023. In terms of weekly gains, both benchmarks are set to post an upside of 4% as geopolitical tension has risen to new heights.

According to OPEC+, the oil supply policy will remain unchanged. The organization also called for some countries to make progress in order to achieve the proposed output cuts.

Given these developments, an analyst from ANZ commented that the output of oil will likely fall even lower during Q2 2024. However, he tied the fall in output to the fact that countries still need to adhere to quotas.

It appears that the oil market will only get tight in the next quarter of 2024. As a result, a significant drawdown in oil inventories is now a high probability in Q2 2024.

Elsewhere, the job report for March 2024 was pretty solid and showed a jump in wage growth. With an addition of 303,000 jobs during March, it makes sense to account for a robust increase in the oil demand.

According to analysts from JPMorgan, the global oil demand will grow during Q1 by almost 1.4 million barrels. Additionally, many energy firms from the USA have already shut down many oil rigs, which hints at more upside in oil prices.

Overall, it appears that both the oil benchmarks will soon cross the $90 threshold. The Brent crude oil is already about $90 while the WTI is now eyeing the $90 handle and could achieve it very soon.

Trending Stories