A Bumpy Ride for Crude Prices
Oil markets experienced a whirlwind of activity on Friday as April WTI crude oil and Apr RBOB gasoline closed with mixed results, influenced by a slew of factors. Gasoline soared to a 5-3/4 month high, yet the dollar index’s rally to a 1-week high exerted downward pressure on energy prices. The Ukrainian drone strikes on Russian refineries and the IEA’s announcement of an impending supply deficit provided some support for crude.
Markets React to Economic Indicators
Friday’s economic news in the US presented a mixed bag for energy demand and crude prices. Despite a decrease in the Mar Empire manufacturing survey and the University of Michigan’s consumer sentiment index, the rise in Feb manufacturing production offered a glimmer of hope for the industry.
IEA Projections and OPEC+ Dynamics
The International Energy Agency forecasted a deficit in global oil markets until 2024 if OPEC+ maintains its production cuts. Conversely, the IEA envisioned a surplus if OPEC+ decides to increase output during their upcoming June meeting. The agency also revised its global crude oil demand growth forecast due to a stronger US economic outlook and increased fuel requirements for ships.
US Production and OPEC’s Stance
The US DOE EIA’s projections on American crude oil production indicated an increase for 2024 and 2025, countering OPEC+ cuts to some extent. OPEC’s monthly report remained steadfast, predicting a considerable rise in world oil consumption in the coming years.
Compliance Concerns and Geopolitical Tensions
Despite OPEC+ extending its production cuts, reports from Vortexa suggested questionable compliance levels, particularly with Russia overshooting its commitments. Geopolitical disturbances in the Middle East, including conflict in Israel and Yemen, added further complexities to the oil market landscape.
Storage Data and Inventory Insights
A decrease in crude held in floating storage and Wednesday’s EIA report on inventory levels provided some relief for oil prices. With US crude oil production dipping slightly and the number of active oil rigs fluctuating, the market remains unsettled.
More Crude Oil News from Barchart
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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