U.S. West Texas Intermediate crude oil futures finished higher this week following some friendly news from OPEC+ on Thursday. The market was poised to finish the week lower until OPEC and its allies made an announcement that may have shook a few of the weaker shorts out of their positions.
Up until then, the catalysts weighing on prices were the restarting of traffic on the Suez Canal after a huge ship blocking the landmark was freed earlier in the week, mixed U.S. inventories data, a stronger U.S. Dollar, fear of increasing supply from Iran and concern over a weakening demand recovery.
OPEC+ Agrees to Gradually Boost Crude Oil Output
OPEC and its allies announced that they have decided to gradually increase oil production by some 2 million barrels per day from May to July, moving cautiously in pace with the recovery of the global economy from the COVID-19 pandemic.
According to reports, the group known as OPEC+ is restoring production that was slashed last year to support prices as demand sagged during the worst of the pandemic recession, which sapped demand for fuel. The group will add back 350,000 barrels per day in May, 350,000 in June, and 400,000 in July.
Traders reacted by driving prices higher on Thursday, suggesting they had been pricing in a more aggressive rise in output for May. Despite the rally, the news isn’t especially bullish so gains could be limited over the near-term.
Traffic Starts Flowing on the Suez Canal