Oil prices rallied on Monday on expectations of tighter supply from OPEC+ cuts, disruptions in Russian refineries due to drone attacks, and optimistic Chinese manufacturing data indicating improving demand.
Brent crude, the international benchmark, climbed 24 cents to reach $87.24 a barrel by 06:49 am, building on a 2.4% gain from the previous week.
Meanwhile, U.S. West Texas Intermediate (WTI) crude rose by 28 cents to hit $83.45 a barrel, following a 3.2% increase in the previous week.
The recent gains in oil prices have been fueled by multiple factors. Firstly, the ongoing production cuts by OPEC+ members have tightened supply dynamics, providing support to prices.
Secondly, drone attacks on Russian refineries have disrupted operations, impacting the country’s fuel exports.
Thirdly, encouraging Chinese manufacturing data has bolstered optimism regarding oil demand, particularly from the world’s largest crude importer.
The situation is compounded by thin trade volumes on Monday due to Easter holidays observed in several countries.
Both Brent and WTI have registered gains for a third consecutive month, with Brent consistently holding above $85 a barrel since mid-March.
This sustained rally follows OPEC+’s commitment to extending production cuts until the end of June, potentially tightening crude supply during the summer months in the Northern Hemisphere.
Analysts from Energy Aspects emphasized geopolitical risks to crude and heavy feedstock supplies, highlighting strong demand fundamentals for the second quarter of 2024.
Overall, the confluence of supply disruptions and improving demand outlooks has propelled oil prices higher, with investors closely monitoring global economic data and geopolitical developments for further cues.
