Oil prices hold steady following 5-day rally amid supply concerns

April 04, 2024 (MLN): Oil prices remained stable on Thursday after rising for five straight sessions on supply concerns arising from major producers keeping output cuts in place, coupled with strong demand signals in the U.S. and tensions in the Middle East.

Brent crude traded near $89.11 per barrel, up by 0.03% on the day.

While West Texas Intermediate crude (WTI) was at $84.97 per barrel, down by 0.10% on the day.

A meeting of top ministers from the Organization of Petroleum Exporting Countries and its allies (OPEC+) including Russia, kept oil supply policy unchanged on Wednesday and pressed some countries to boost compliance with output cuts, as Reuters reported.

The group said some members would compensate for oversupply in the first quarter. It also said Russia would switch to output rather than export curbs.

Analysts at ING said oil prices continued to edge higher after the meeting recommended no change to OPEC+ output policy.

Both the June Brent contract and the May WTI contract have risen for the past four days and closed on Wednesday at the highest since the end of October.

"Brent is facing some resistance at the US$90/bbl level, with it unable to break above it so far," the ING analysts said.

Also on Wednesday, Federal Reserve Chair Jerome Powell was cautious about future interest rate cuts because of recent data showing higher-than-expected job growth and inflation.

The comments were positive for oil because they indicated solid U.S. economic growth, said Rob Haworth, senior investment strategist for U.S. Bank's asset management group.

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Oil's recent gains have followed Ukrainian attacks on Russian refineries that cut fuel supply and concerns that the Israel-Hamas war in Gaza may spread to include Iran, possibly disrupting supplies in the key Middle East region.

Iran has vowed revenge against Israel for an attack on Monday that killed high-ranking Iranian military personnel. Iran is the third-largest producer in OPEC.

"While this (OPEC+ decision) was widely expected, it provides some assurance that the recent rise in tension in the Middle East has not altered the group's view on the market," ANZ analysts said in a note on Thursday.