Oil prices inch up as major producers maintain output cuts

WEB DESK: Global oil prices experienced a modest uptick on Thursday due to concerns over reduced supply, stemming from major producers maintaining output cuts, and indications of robust economic growth in the US, the world’s largest oil consumer.

At 0651 GMT, Brent futures for June saw a marginal increase of 4 cents, reaching $89.39 per barrel. Similarly, US West Texas Intermediate (WTI) futures for May rose by 2 cents to $85.45 per barrel.

A recent gathering of key ministers from the Organisation of Petroleum Exporting Countries and its allies (OPEC+), including Russia, decided to uphold current oil supply policies during Wednesday’s meeting.

Additionally, there was a push for enhanced compliance with output reductions from certain member nations.

The group announced plans for some members to offset oversupply experienced in the first quarter, with Russia transitioning towards output adjustments rather than export restrictions.

Both the June Brent contract and the May WTI contract have seen an upward trend over the last four days, culminating in Wednesday’s closure at the highest levels since late October.

ING analysts observed that oil prices maintained an upward trajectory following the OPEC+ meeting, during which no changes to output policy were recommended.

However, they noted resistance for Brent crude around the $90/bbl mark, indicating a challenge in surpassing this threshold.

Federal Reserve Chair Jerome Powell struck a cautious tone regarding future interest rate adjustments in light of recent data illustrating stronger-than-anticipated job growth and inflation.

This sentiment was viewed positively for oil markets, as it suggested sustained economic expansion in the US, according to Rob Haworth, senior investment strategist for US Bank’s asset management group.

Meanwhile, Iran has vowed retaliation against Israel for an attack on Monday that resulted in the death of high-ranking Iranian military personnel.

As the third-largest producer within OPEC, Iran’s stance adds a geopolitical dimension to market dynamics.

ANZ analysts remarked on Thursday that although the OPEC+ decision was widely anticipated, it offers reassurance that recent tensions in the Middle East have not significantly altered the group’s market outlook.