Crude oil prices are set to record the longest string of monthly gains since early 2018, Bloomberg reported today, citing the increased price volatility resulting from the war in the Ukraine and Covid lockdowns in China.
April is the fifth month in a row that oil prices will end with gains, despite the slips caused by demand uncertainty as China continued to pursue its zero-Covid policy, locking up several large cities.
Despite these demand worries, the upside potential for prices remains considerable as the European Union reports progress on an oil embargo against Russia. Previously a staunch opponent of such a move, Germany has now mellowed, with economy minister Robert Habeck saying this week that Germany had already considerably reduced its Russian crude imports.
The latest from Habeck was an expression of hope that Germany would be able to find a replacement for Russian oil within days, with the official signaling this would put an end to its opposition to an embargo.
These updates from Germany became the latest to push oil prices up, reversing losses brought about by the demand worries. If an embargo is agreed upon, prices will soar even higher and extend their gains streak into next month.
OPEC+, meanwhile, is meeting next Thursday for its regular discussion of production. Expectations from analysts point to zero change in strategy, meaning the cartel will likely stick to its original arrangement of adding approximately 400,000 bpd to its combined output every month even though many member states have consistently failed to deliver.
Last month, OPEC alone added just 57,000 bpd in production, which was substantially lower than its quota of over half of the agreed 400,000 bpd monthly increase in OPEC+ output. The figure represented production declines in some OPEC members, such as Nigeria and Lybia, with most of the group’s increase in output coming from Saudi Arabia.
By Irina Slav for Oilprice.com
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