Home » Business » OPEC+ Alliance Decisions and Global Events Drive Oil Prices to $83.55: Weekly Market Update

OPEC+ Alliance Decisions and Global Events Drive Oil Prices to $83.55: Weekly Market Update

At the end of this week’s trading yesterday evening, Friday, Brent crude futures contracts (for delivery next May) recorded a weekly increase of 2.4% compared to late last week, to reach the limits of 83.55 US dollars. US Texas Intermediate crude futures also recorded a similar increase of 4.5%, reaching about 79.97 US dollars.

These developments came as markets awaited the decisions of the OPEC+ alliance regarding crude oil production levels during the second quarter of this year, as there are expectations that the alliance will continue its policy of reducing production until the end of next June. These decisions are supposed to be officially issued during the next week, before they enter into force starting at the beginning of next April. If the coalition countries decide to continue the current production reduction policy, this will likely represent a strong incentive for a recovery in oil prices, which is what prompts speculators today to increase demand for crude oil in anticipation of the coalition’s decisions.

These developments came in parallel with the release of official statistics showing a decline in industrial activity in China during the month of February, for the fifth month in a row. Usually, these types of numbers indicate a decline in Chinese demand for crude oil, which puts negative pressure on oil prices to decline. However, on the contrary, oil prices continued to record noticeable increases yesterday, Friday, driven by exactly the factors that pushed the opposite trend, namely market expectations related to OPEC+ decisions, and the continued unrest in the Red Sea region.

It is also important to note that global oil prices received an additional boost from the personal consumption expenditures index in the United States of America, which is usually used by the Federal Reserve to estimate inflation rates. This indicator showed that inflation rates are consistent with economists’ expectations, which indicates the approaching era of interest cuts next summer. Markets usually expect a positive impact on the level of oil prices, in parallel with lowering interest rates, or stopping monetary tightening episodes followed by the major central banks in the world, especially the Federal Reserve.

2024-03-02 11:07:44
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