By Adedapo Adesanya
After back-to-back losses, prices of crude oil benchmarks steadied on Thursday after erasing the impact of a surprise cut to production targets by the Organisation of the Petroleum Exporting Countries (OPEC).
But Brent crude edged up 18 cents or 0.23 per cent to $77.87 a barrel, while the US West Texas Intermediate (WTI) crude rose 12 cents or 0.16 per cent to $74.42 per barrel.
Recession fears had gripped the market, leading to heavy losses that saw the international benchmark, Brent crude, fall below $80 per barrel.
The market held on to comment by Russian Deputy Prime Alexander Novak, who described oil markets on Thursday as balanced and hinted no more output cuts were needed.
He said the OPEC+ group saw no need for further output cuts despite lower-than-expected Chinese demand but that the organisation can always adjust policy if necessary.
He said Russia reached its targeted output this month after announcing cuts of 500,000 barrels per day, or 5 per cent of its oil production, until the year-end.
Mr Novak said OPEC+ did not expect oil shortages on the global market after the production cuts, even though the International Energy Agency (IEA) said they risked exacerbating a supply deficit expected in the second half of the year.
IEA had warned that OPEC should be careful not to cut too much production lest they jack up prices too high.
The IEA’s warning was for the cartel not to cut production too much, lest crude oil prices rise to the point where it stifles economic growth and pressures consumers.
“The global economy is in a very fragile stage,” Mr Fatih Birol, the head of IEA, adding that higher oil prices were “the last thing that we want.”
OPEC did not take the warning lightly, with its Secretary General, Mr Haitham Al Ghais, saying that IEA should be “very careful about further undermining” oil industry investments, which producing countries say are vital for economic growth and depend on robust oil prices.
“The IEA knows very well that there is a confluence of factors that impact markets,” MR Al Ghais said on Thursday, “The knock-on effects of Covid-19, monetary policies, stock movements, algorithm trading, commodity trading advisors and SPR releases (coordinated or uncoordinated), geopolitics, to name a few.”
“If anything will lead to future volatility, it is the IEA’s repeated calls to stop investing in oil, knowing that all data-driven outlooks envisage the need for more of this precious commodity to fuel global economic growth and prosperity in the decades to come, especially in the developing world.”
Pressure came as data on Thursday showed US economic growth slowed by more than expected in the first quarter, although jobless claims fell in the week ending April 22.
US GDP grew by 1.1 per cent for the three months ending in March, which represents a slowdown from 2.6 per cent growth in the fourth quarter of 2022 and 3.2 per cent in the third quarter of last year.
Dipo Olowookere