Crude has soared more than 30% so far this year with OPEC+âs output restraint holding the market over until a full-fledged comeback in consumption. The groupâs latest decision represents a victory for Riyadh, which has advocated for tight curbs to keep prices supported.
âOverall, this was the most bullish outcome we could have expected,â JPMorgan Chase & Co. analysts including Natasha Kaneva wrote in a note to clients. Saudi Arabiaâs 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 said in an interview after the meeting that shale companies were now more focused on dividends.
Prices: West Texas Intermediate for April delivery advanced $2.26 to settle at $66.09 a barrel, the highest level since April 2019 Futures surged 7.5% this week, the largest weekly gain in a month Brent for May settlement climbed $2.62 to end the session at $69.36 a barrel
Oilâs rebound this year stands to intensify the debate about a 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. Meanwhile, U.S. employers added more jobs than forecast in February.
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 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.
A closely watched measure in the oil-options market — West Texas Intermediateâs skew on the nearest contract — turned positive Friday for the first time in more than a year, signaling traders are willing to pay more for protection against rising crude prices.
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