Crude Oil Jumps 2% as Traders Sight Possible OPEC+ Cuts

March 2, 2024
crude oil

By Adedapo Adesanya

Crude oil appreciated by about 2 per cent on Friday as traders awaited a decision from the Organisation of the Petroleum Exporting Countries and allies (OPEC+) on supply agreements for the second quarter.

Yesterday, the price of Brent futures went up by $1.64 or 2 per cent to $83.55 per barrel and the US West Texas Intermediate (WTI) futures rose by $1.71 or 2.19 per cent to $79.97 a barrel.

For the week, Brent added around 2.4 per cent while WTI gained more than 4.5 per cent.

Analysts noted that the expectation that OPEC+ is going to continue with their voluntary production cuts well into the second quarter of 2024 is the main focus on the market.

The decision on extending OPEC+ cuts is expected in the first week of March with individual countries to announce their decisions.

Last November, the alliance agreed to voluntary cuts totalling about 2.2 million barrels per day for the first quarter this year, led by Saudi Arabia rolling over its own voluntary cut.

Prices have found support this year from rising geopolitical tensions due to attacks by the Iran-aligned Houthi group on Red Sea shipping, although concern about economic growth and high interest rates has weighed and now it seems that extending the output cuts into the second quarter is likely.

Meanwhile, continued tension in the Red Sea also lifted prices on Friday as the leader of Yemen’s Houthis said on Thursday the group would introduce military surprises in the region.

Houthi militants have repeatedly launched drones and missiles against international commercial shipping since mid-November, saying they are acting in solidarity with Palestinians against Israel’s military actions in Gaza.

Their Red Sea attacks have disrupted global shipping and forced firms to re-route to longer and more expensive journeys around southern Africa and stoked fears that the Israel-Hamas war could spread to destabilise the wider Middle East.

The US and the United Kingdom began striking Houthi targets in Yemen last month in retaliation for the attacks on Red Sea shipping, but this has not stopped attacks.

On the demand side, Chinese manufacturing activity shrank for the fifth straight month in February, indicating possible worries from the world’s largest oil importer.

US energy firms added oil and natural gas rigs for a second straight week, said energy services firm Baker Hughes as the oil rig count, an early indication of future output, rose by three to 506 this week, the highest since September.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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