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Oil futures rose Monday, buoyed ahead of a decision this week by the Organization of the Petroleum Exporting Countries and its allies that’s expected to see a loosening of production curbs.
The U.S. House early Saturday passed the Biden administration’s $1.9 trillion package of COVID-19 relief spending. It now moves to the Senate, where it may be pared as Democrats work to push it through a chamber that’s divided 50-50, with Vice President Kamala Harris serving as the tiebreaking vote.
West Texas Intermediate crude for April delivery CL.1, +0.68% CLJ21, +0.68% rose 74 cents, or 1.2%, to $62.24 a barrel on the New York Mercantile Exchange. May Brent crude BRN00, +0.88% BRNK21, +0.88%, the global benchmark, jumped 82 cents, or 1.3%, to $65.24 a barrel on ICE Futures Europe.
Oil has rallied so far this year, boosted by expectations for the rollout of COVID-19 vaccines and fiscal stimulus to lead to a strong pickup in demand, while efforts by OPEC and its allies, a group known as OPEC+, to keep a lid on production have helped keep the market in balance, analysts said, a move enhanced by Saudi Arabia’s decision to cut an additional 1 million barrels a day in February and March.
“Clearly, given the strength we have seen in the market there will be growing pressure from within the group to ease cuts. While the market is expecting the group to increase output from April, the big unknown is by how much,” said Warren Patteson, head of commodities strategy at ING, in a note.
“It is very likely that Saudi Arabia will bring back the 1 million barrels a day of supply that it is cutting voluntarily over February and March, then as for group cuts, under the deal the group can ease by 500,000 barrels per month,” he said. “However given that the group did not ease anywhere near that in the first quarter of this year, there may be some members calling for more than 500,000 barrels a day of easing come April.”
