(Bloomberg) -- Oil moved above $65 a barrel after OPEC+ chose not to relax supply curbs even as the global economy pulls out of its pandemic-driven slump, confounding widespread expectations the group would loosen the taps.
The surprise decision on Thursday spurred a wave of crude price forecast upgrades by major banks and a surge in the market’s structure. The producer alliance agreed to hold output steady in April, while Saudi Arabia said that it will maintain its 1 million barrel-a-day voluntary production cut. West Texas Intermediate rose as much as 2.6% and Brent topped $68.
See also: Saudis Bet ‘Drill, Baby, Drill’ Is Over in Push for Pricier Oil
Crude has soared this year, shepherded higher by OPEC+ restraining supplies and the vaccine-aided recovery in consumption that’s drained inventories. The group’s decision represents a victory for Riyadh, which has advocated for tight curbs to keep prices supported.
“Overall, this was the most bullish outcome we could have expected,” JPMorgan Chase & Co. analysts including Natasha Kaneva wrote in a note to clients.
The Organization of Petroleum Exporting Countries and its allies including Russia had been debating whether to restore as much as 1.5 million barrels a day of output. As part of the agreement, which was struck at a virtual meeting on Thursday, Russia and Kazakhstan were granted exemptions. The group’s next meeting is set for April 1 to discuss production levels for May.
Saudi Arabia’s bold and unexpected gamble to restrain production is founded upon its view that, this time around, higher prices will not lead to a big increase in output by American shale drillers. Saudi Energy Minister Prince Abdulaziz bin Salman told Bloomberg News in an interview after the OPEC+ meeting that shale companies are now more focused on dividends.
Oil’s rapid gains this year stand to intensify the debate about the potential resurgence in inflation, and complicate the task facing the Federal Reserve as it supports the U.S. recovery. The Treasury market is already looking for signs of faster price gains, with yields rising rapidly. Crude is up more than 8% since Tuesday’s close despite a strengthening of the dollar and a steep sell-off in other major commodities, especially economic bellwether copper.
See also: Here’s What Top Banks Are Saying About the Saudi-Led Oil Shock
Goldman Sachs Group Inc. raised its Brent forecasts by $5 a barrel and now sees the global crude benchmark at $80 in the third quarter. JPMorgan increased its Brent projection by $2 to $3 a barrel and Australia & New Zealand Banking Group Ltd. boosted its three-month target to $70. Citigroup Inc. said crude prices could top $70 before the end of this month.
Change Course
Oil rising to these levels will likely increase strains within OPEC+ as some members will want to pump more to relieve under-pressure economies, Citi said in a note. Top importers such as China and India would also not be happy and the alliance is likely to change course at its next meeting, it said.
The lack of fresh supply was reflected in oil’s futures curve. Brent’s prompt timespread widened to 63 cents in backwardation, a bullish structure where near-dated prices are higher than later-dated ones, from 54 cents Thursday. Gauges further along the oil futures curve also surged.
For more articles like this, please visit us at bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2021 Bloomberg L.P.
"oil" - Google News
March 05, 2021 at 03:29PM
https://ift.tt/3c1V8p3
Oil Soars to $65 With Saudi Supply Gamble Buoying Market Bulls - Yahoo Finance
"oil" - Google News
https://ift.tt/2PqPpxF
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "Oil Soars to $65 With Saudi Supply Gamble Buoying Market Bulls - Yahoo Finance"
Post a Comment