Published On : 04/04/2024

Oil steady, bolstered by lower supply concerns

By Paul Carsten and Robert Harvey

LONDON (Reuters) -Oil prices were steady on Thursday, shored up by concerns about lower supply as major producers keep output cuts in place and geopolitical tensions add further risk.

Brent futures for June rose by 3 cents, or 0.03%, to $89.38 a barrel at 1330 GMT. U.S. West Texas Intermediate (WTI) futures for May fell by 3 cents, or 0.04%, to $85.40 a barrel.

A meeting of top ministers from the Organization of Petroleum Exporting Countries and its allies (OPEC+) including Russia, kept oil supply policy unchanged on Wednesday and pressed some countries to boost compliance with output cuts.

The group said some members would compensate for oversupply in the first quarter. It also said Russia would switch to output rather than export curbs.

“As it stands, the market seems to accept the ill-discipline from Iraq and Russia as to quota adherence will eventually be sorted out, and instead concentrated on how current cuts will roll on through June,” PVM analyst John Evans said.

Both the June Brent contract and the May WTI contract closed on Wednesday at their highest levels since October, having received support in recent days from heightened geopolitical tensions and potential supply risks.

“While this (OPEC+ decision) was widely expected, it provides some assurance that the recent rise in tension in the Middle East has not altered the group’s view on the market,” ANZ analysts said in a note on Thursday.

Iran has vowed revenge against Israel for an attack on Monday that killed high-ranking Iranian military personnel. Iran is the third-largest producer in OPEC.

Oil’s recent gains have also followed Ukrainian attacks on Russian refineries that cut fuel supply and concerns that the Israel-Hamas war in Gaza may spread to include Iran, possibly disrupting supplies in the key Middle East region.

Investors continue to look to macroeconomic data and monetary policy for potential clues on the outlook for oil demand.

U.S. unemployment claims increased by more than expected in the last week, according to Labor Department statistics, as labour market conditions gradually ease.

That came after Federal Reserve Chair Jerome Powell expressed caution on Wednesday about the timing of future interest rate cuts, after recent data has showed higher-than-expected job growth and inflation.

Powell’s comments supported oil prices because they indicated solid U.S. economic growth, said Rob Haworth, senior investment strategist for U.S. Bank’s asset management group.

(Reporting by Robert Harvey and Paul Carsten in London and Laura Sanicola and Sudarshan Varadhan; editing by Sonali Paul, Jason Neely and David Evans)

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