The price of a WTI barrel soared to heights not seen since November as the market braces for an OPEC+ decision on oil production levels in April and beyond.
WTI was trading at $80.04 per barrel at 10:42 am ET, an increase of $1.78 per barrel on the day, or 2.27%. Behind the rise in price is the market’s anticipation that OPEC+ will extend its voluntary production cuts for the next quarter and the volatility that could come from updated U.S. crude oil and crude products inventory data that will be released from the American Petroleum Institute (API) at 4:30 pm ET on Tuesday.
WTI prices are now at their highest level since early November 2023.
Brent crude oil prices were also trading up on the day, at $83.66 per barrel, up $1.75 or 2.14%--also to their highest level since November.
The market is anxiously awaiting a decision from OPEC+ on the plan for Q2 2024. The group has yet to divulge a date when it will meet to discuss the issue with its members, although April is quickly approaching. OPEC+ will need to determine whether it will stay the course and extend the current voluntary production cuts into the second quarter, whether it will deepen the cuts, or whether it will scale them back or scrap the cuts altogether. Most industry watchers favor the first option, arguing that OPEC+ has no choice but to extend the current level of production cuts if it wants to keep prices from falling.
Tuesday’s price rise does provide OPEC+ with a bit of cover, although OPEC+ still insists it is not managing prices but managing supply based on market needs.
By Julianne Geiger for Oilprice.com
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The proof that the market is tightening is that the US Department of Energy (DoE) managed to only return 8 million barrels (mb) to the SPR in 2023 out of 220 mb withdrawn between December 2021 and 2022. And yet, the aforementioned manipulators were doing their utmost to create the illusion of a glut in the market and a weakening demand.
However, the manipulators can't fool the market for long. The fundamentals will soon prevail with Brent crude ranging between $90-$100 this year.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert