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Crude Holds onto 3% Rally As OPEC to Raise Oil Production in May

Summary:
Crude oil futures maintained their gains on Thursday, despite the Organization of the Petroleum Exporting Countries (OPEC) announcing that it would gradually raise production in May. But while most industry observers expected the cartel to maintain an output freeze, prices continued rallying with expectations that the sector would remain tight. May West Texas Intermediate (WTI) crude futures surged .77, or 2.99%, to .93 per barrel at 17:25 GMT on Thursday on the New York Mercantile Exchange. US crude prices tumbled 4.8% last month, but they are on track for a weekly gain of 4.5%. Year-to-date, WTI contracts are up 26%. Brent, the international benchmark for oil prices, is looking to test . June Brent crude futures climbed .61, or 2.57%, to .35 a barrel on London’s ICE Futures

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Crude oil futures maintained their gains on Thursday, despite the Organization of the Petroleum Exporting Countries (OPEC) announcing that it would gradually raise production in May. But while most industry observers expected the cartel to maintain an output freeze, prices continued rallying with expectations that the sector would remain tight.

May West Texas Intermediate (WTI) crude futures surged $1.77, or 2.99%, to $60.93 per barrel at 17:25 GMT on Thursday on the New York Mercantile Exchange. US crude prices tumbled 4.8% last month, but they are on track for a weekly gain of 4.5%. Year-to-date, WTI contracts are up 26%.

Brent, the international benchmark for oil prices, is looking to test $65. June Brent crude futures climbed $1.61, or 2.57%, to $64.35 a barrel on London’s ICE Futures exchange. Brent slumped 4.25% in March, but it will enjoy a weekly jump of 4.4%. So far this year, Brent prices have risen 24.5%.

OPEC and its allies, OPEC+, announced that officials reached an agreement that would raise output from May to July. The specifics of the arrangement were not officially announced. But The Wall Street Journal is reporting that OPEC+ will increase output by 350,000 barrels per day (bpd) in May and June and 450,000 bpd in July.

Saudi Energy Minister Prince Abdulaziz bin Salman confirmed during a press conference that Riyadh’s voluntary cut would be incrementally rolled back by 250,000 bpd in May, 350,000 bpd in June, and 400,000 bpd in July.

Even if demand increases in the spring and summer months, the international oil market would remain tight. The Joint Technical Committee (JTC) said in a statement:

They recognized the improvements in the market supported by global vaccination programmes and stimulus packages in key economies but noted that the volatility observed in recent weeks warrants a continued cautious and vigilant approach in monitoring market developments.

In other industry news, the Baker Hughes oil rig count rose to 337 in the week ending April 1, up from 324 in the previous week. The total rig count also jumped from 417 to 430.

On Wednesday, the US Energy Information Administration (EIA) reported that domestic stockpiles of crude oil slipped by 876,000 barrels, better than the market forecast of an 107,000-barrel build. This represented the first weekly drop since the middle of February.

Inventories at the Cushing, Oklahoma storage facility increased 782,000 barrels. Gasoline stocks plunged 1.735 million barrels, while distillate supplies climbed 2.542 million barrels.

In other energy commodities, May natural gas futures rose $0.04, or 1.53%, to $2.648 per million British thermal units (btu). May gasoline futures surged $0.0588, or 2.98%, to $2.0181 a gallon. May heating oil futures advanced $0.0516, or 2.93%, to $1.8216.

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Published under: Oil

Andrew Moran
I am a full-time professional writer. Prior to my self-employment, I worked as a reporter for Digital Journal covering the politics beat and The Toronto Times reporting on the city’s entertainment scene. I currently write mostly about business, marketing and finance

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