US West Texas Intermediate crude futures rose more than a dollar to 64.87 dollars. The two benchmarks rose more than 4% yesterday after the Organization of the Petroleum Exporting Countries (OPEC) and allies of the group known as “OPEC +” extended oil production cuts to April, and granted limited exemptions to Russia and Kazakhstan.
“It just shows the surprise in the discipline of OPEC +,” said Michael McCarthy, chief market strategist at CMC Markets.
The investors were surprised that Saudi Arabia decided to maintain its voluntary reduction of one million barrels per day during April, even after oil prices rose over the past two months.
Crude prices have risen since the beginning of November, but the present demand for oil from refiners and other consumers has not yet matched that, as shipments to major markets such as China are traded in general at low prices in light of the slowdown in sales.
Indian Oil Minister Dharmendra Pradhan said that the decision of “OPEC + to continue production cuts would harm consumers in countries that buy crude.”
Analysts are revising their price forecasts to include continued restriction of supplies by OPEC + and shale oil producers in the United States who are curbing spending in order to boost investor returns.
For its part, Goldman Sachs raised its forecast for Brent price of $ 5 to $ 75 a barrel in the second quarter and $ 80 a barrel in the third quarter of this year, while UBS increased its forecast for Brent to $ 75 a barrel and for US West Texas Intermediate crude to $ 72 a barrel in the year. The second half of 2021.
Goldman Sachs Commodities Research raised its forecast for the price of Brent crude for the second and third quarters by five dollars a barrel after OPEC and its allies kept their agreement to cut supplies unchanged, and said that “the discipline of shale oil producers is likely behind the group’s increase in production at a slower pace.
The bank said in a note that it now expects Brent prices to reach $ 75 a barrel in the second quarter and $ 80 a barrel in the third quarter of 2021.
Shale oil producers in the United States have reacted quickly to oil price gains in recent years, winning market share as Saudi Arabia and other major producers cut production, but have been reluctant to boost production since demand was destroyed by the pandemic last year.