Oil prices experienced a robust surge of more than $1 a barrel, concluding the month with significant gains amidst expectations of OPEC+ maintaining production cuts, ongoing assaults on Russia’s energy infrastructure, and a decline in the U.S. rig count, which has tightened crude supplies.
Brent crude futures for May settlement reached $87.48 a barrel, marking its highest level since October 27, with a gain of $1.39, or 1.6%. Meanwhile, the June contract settled at $87 a barrel, rising $1.58, as the May contract expired on Thursday.
U.S. West Texas Intermediate (WTI) crude futures for May delivery settled at $83.17 a barrel, soaring by $1.82, or 2.2%.
For the week, Brent saw a rise of 2.4%, while WTI registered an increase of approximately 3.2%, marking the third consecutive month of gains for both benchmarks.
In the preceding session, oil prices had faced downward pressure due to an unexpected uptick in U.S. crude oil and gasoline inventories, driven by a surge in crude imports and subdued gasoline demand, according to data from the Energy Information Administration.
However, the increase in crude stocks was smaller than anticipated, providing support to the Brent crude oil price moving forward, noted SEB analyst Bjarne Schieldrop.
Additionally, the rise in U.S. refinery utilization rates further bolstered prices, alongside the decline in the oil and gas rig count, which dropped by three to 621 in the week ending March 28, according to energy services firm Baker Hughes.
Moreover, a report from the Commerce Department’s Bureau of Economic Analysis revealed that the U.S. economy expanded at a faster pace than previously estimated in the fourth quarter, indicating robust forward earnings and heightened demand for energy products.
Inflation data also suggested that the U.S. Federal Reserve may delay cutting its short-term interest rate target, which typically supports oil demand.
Looking ahead, investors will closely monitor the upcoming meeting of the Joint Monitoring Ministerial Committee of the Organization of Petroleum Exporting Countries (OPEC), with heightened geopolitical risks raising expectations of potential supply disruptions.
Despite these uncertainties, OPEC+ is unlikely to alter its oil output policy until a full ministerial gathering scheduled for June.
The recent attacks by Ukraine on Russian energy infrastructure have further underscored concerns about tightening global crude supplies, contributing to the positive sentiment surrounding oil prices, according to John Kilduff, partner at Again Capital LLC.