Oil rally continues as investors anticipate production cuts

1 Apr 2024 , 10:35 AM

On Monday, oil prices marginally decreased while maintaining the majority of their recent gains due to concerns about OPEC+ supply constraints, attacks on Russian facilities, and positive industrial statistics from China.

After increasing 2.4% the previous week, Brent crude dropped 17 cents, or 0.2%, to $86.83 per barrel. After rising 3.2% the previous week, U.S. West Texas Intermediate crude was down 11 cents, or 0.1%, at $83.06 per barrel.

Due to the Easter holiday, which is observed in various nations, low trade volumes are anticipated on Monday.

For the third month in a row, both benchmarks closed higher. Brent has been trading above $85 a barrel since mid-March, thanks to the Organisation of the Petroleum Exporting Countries (OPEC+) and their allies’ commitment to prolong production cuts through the end of June, which may result in a shortage of crude during the northern hemisphere’s summer.

In order to equitably distribute production cuts with other OPEC+ members, Russian Deputy Prime Minister Alexander Novak announced on Friday that the country’s oil businesses will concentrate on lowering output rather than exports in the second quarter.

Numerous Russian refineries were taken down by drone strikes, which is anticipated to lower Russia’s petroleum exports.

China, the world’s top crude importer, saw an increase in manufacturing activity in March for the first time in six months, according to an official factory survey released on Sunday. Despite this, the country’s economy continues to be hindered by the property sector crisis.

In order to sustain the global economy and the demand for oil, investors are also closely examining U.S. economic statistics for indications regarding when the Federal Reserve will lower interest rates this year.

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