London, April 5, 2024 – Oil prices extended gains on Friday and were on course for a second weekly gain, supported by geopolitical tensions in the Middle East, concerns over tightening supply and expectations about demand growth as economies improve.
Brent crude was up 36 cents, or 0.4%, to $91.01 a barrel by 1031 GMT. U.S. West Texas Intermediate crude was at $86.79 a barrel, up 20 cents, or 0.2%.
On Thursday both benchmarks settled at their highest level since October.
Brent and WTI are set to notch a more than 4% gain this week, climbing for a second straight week, after third-largest OPEC producer Iran vowed revenge against Israel for an attack that killed high-ranking Iranian military personnel.
“The market knows that some kind of retaliation from Iran is likely, but it doesn’t know any details which creates a great discomfort and nervousness,” SEB analyst Bjarne Schieldrop said.
Israel has not claimed responsibility for the attack on Iran’s embassy compound in Syria on Monday.
Ongoing Ukrainian drone attacks on refineries in Russia may have disrupted more than 15% of Russian capacity, a NATO official said on Thursday, hitting the country’s fuel output.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known as OPEC+, this week kept their oil supply policy unchanged and pressed some countries to increase compliance with output cuts.
“Further clampdowns on adherence to quotas should see output fall further in Q2,” ANZ analysts Daniel Hynes and Soni Kumari wrote in a note.
“The prospect of a tighter market should see a drawdown in inventories during the second quarter.”
Heavy oil supply has also tightened globally after Mexico and the United Arab Emirates cut exports of these grades.
This comes amid solid global oil demand growth of 1.4 million barrels per day (bpd) in the first quarter, JPMorgan analysts wrote in a note.
“Our high-frequency demand indicators estimate that total oil consumption in March averaged 101.2 million bpd, 100,000 bpd above our published estimates,” they said.
Investors are awaiting a U.S. March employment report on Friday for further clues on the health of the U.S. economy and the direction of its monetary policy.
(Reuters)
