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Oil futures rallied Thursday by more than 5% after the Organization of the Petroleum Exporting Countries and its allies said they will rollover current production cuts to the end of April.
The group, known as OPEC+, said they have approved a “continuation of the production levels of March for the month of April.”
Russia and Kazakhstan, however, will be allowed to boost production by 130,000 and 20,000 barrels per day, respectively, “due to continued seasonal consumption patterns,” it said.
Saudi Arabia also extended its voluntary output cut of one million barrels per day, which was due to expire at the end of March, through the month of April.
During the press conference, Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman said the Saudis will “gradually phase” back in the one million barrels per day it has cut from its own production.
“We’re not fast, we’re not furious — we’re cautious,” he said. “Our voluntary cut came through our own will, bringing it back will also be decided by our own will.”
West Texas Intermediate crude for April delivery CL.1, +4.91% CLJ21, +4.91% rose $3.47, or 5.7%, to $64.75 a barrel on the New York Mercantile Exchange, poised for the highest front-month contract finish since April 2019, according to FactSet data.
May Brent crude BRN00, +4.74% BRNK21, +4.74%, the global benchmark, was up $3.58, or 5.6%, at $67.65 a barrel on ICE Futures Europe.
Short-term oil demand is “very difficult to forecast, so it is hard to say whether or not OPEC+ is making the right decision,” Alissa Corcoran, director of research at Kopernik Global Investors. “It is likely, however, that should the oil price rise on tight supplies, other oil producers will fill that void.”
Crude had also rallied Wednesday after Reuters reported that OPEC+ would consider rolling over existing curbs through April. Bloomberg, however, reported that Russia was leading a charge to reopen the taps, leaving the group on track to return up to 1.5 million barrels a day to production next month.
Oil prices on Wednesday climbed sharply despite data from the Energy Information Administration that revealed a 21.6 million-barrel weekly rise in U.S. crude supplies, but disruptions to refinery activity following frigid temperatures in mid-February contributed to significant declines in gasoline and distillate stockpiles.
On Nymex Thursday, April gasoline RBJ21, +3.01% edge up by 3.6% to $2.0209 a gallon and April heating oil HOJ21, +3.63% rose 4.2% to $1.9113 a gallon.
Natural-gas futures were lower after the EIA reported on Thursday that domestic supplies of natural gas declined by 98 billion cubic feet for the week ended Feb. 26. On average, the data were expected to show a fall of 137 billion cubic feet for the week, according analysts polled by S&P Global Platts.
April natural gas NGJ21, -2.95% traded at $2.752 per million British thermal units, down 2.3%.
