Oil prices continued to rise on Friday, with an increase of over $1, as geopolitical tensions and production cuts outweighed concerns about rate cuts by the U.S. Federal Reserve. Brent futures for June surpassed $91 per barrel before settling at a gain of $1.30, or 1.5 percent, at $90.65. Meanwhile, U.S. West Texas Intermediate (WTI) futures for May settled up $1.16, or 1.4 percent, at $86.59 per barrel. Both contracts closed at their highest levels since October and continued to climb after the trading session ended, supported by heightened geopolitical tensions and potential supply risks.
Read more: Oil prices hit highest level in five months, approach $90 as OPEC output remains steady
Brent and WTI futures rise to five-month highs
The surge in oil prices on Thursday marked their highest levels in five months, driven by worries about escalating geopolitical tensions in the Middle East, which raised concerns about possible disruptions in the oil supply. In addition, the Organization of Petroleum Exporting Countries (OPEC) and its allies decided to maintain their existing production cuts during a meeting held on Wednesday, which contributed to a tightening outlook for crude oil in the near future. As of 21:13 ET (01:13 GMT), Brent oil futures expiring in June had increased by 0.3 percent to reach $89.64 per barrel, while West Texas Intermediate (WTI) crude futures rose by 0.3 percent to $84.90 per barrel.
Recent gains in oil prices have also been influenced by attacks on Russian refineries that led to a reduction in fuel supply, as well as news that Mexico’s state energy company, Pemex, requested its trading unit to cancel up to 436,000 barrels per day of crude exports this month in preparation for processing domestic oil at the new Dos Bocas refinery.
OPEC’s unchanged oil supply policy
During Wednesday’s meeting of top ministers from the Organization of the Petroleum Exporting Countries and its allies (OPEC+), including Russia, the decision was made to keep oil supply policy unchanged and urge certain countries to improve compliance with output cuts. The group announced that some members would compensate for oversupply in the first quarter and that Russia would focus on output curbs rather than export curbs.
Monitoring economic data and monetary policy
Investors will closely monitor economic data and monetary policy for potential indications regarding the outlook for oil demand. According to Labor Department statistics, U.S. unemployment claims increased more than expected in the last week, indicating a gradual easing of labor market conditions. Fed Chair Jerome Powell expressed caution on Wednesday regarding the timing of future interest rate cuts, citing recent data showing higher-than-expected job growth and inflation. The employment report for March, which is scheduled to be released on Friday, is expected to show an increase of 200,000 nonfarm payrolls, following a rise of 275,000 in February, according to a Reuters survey.
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