Home Industry Energy Oil rises, markets await OPEC+ decision amid mixed demand drivers A decision on extending the cuts is expected in the first week of March, with individual countries expected to announce their decisions by Reuters March 1, 2024 Image courtesy: Aldo Pavan/ Getty Images Oil prices edged up on Friday and were set to end the week modestly higher as markets awaited an OPEC+ decision on supply agreements for the second quarter amid differing demand indicators for key consumers US and China. Brent futures for May climbed 31 cents, or 0.38 per cent, to $82.22 a barrel by 0645 GMT, while US West Texas Intermediate (WTI) for April rose 24 cents, or 0.31 per cent, to $78.50. WTI is on track for at least a 2.5 per cent increase this week, while Brent is holding near last week’s settlement price. Brent has hovered comfortably above the $80 mark for three weeks. “Brent crude prices continued to trade sideways this week… Brent at $83/bbl has shown recent strength although fundamentals remain tilted to oversupply,” said BMI analysts in a client note. “Expectations of a continuation of OPEC+ production cuts into Q2 2024 are also weighing on sentiment as soft demand is expected to persist…However, time spreads for Brent futures contracts have widened. The move to stronger backwardation (market structure) will be supportive of a more bullish stance for prices as markets are pricing in tightening in the months ahead,” the analysts added. A Reuters survey showed the Organization of the Petroleum Exporting Countries pumped 26.42 million barrels per day (bpd) this month, up 90,000 bpd from January. Libyan output rose month-on-month by 150,000 bpd. A decision on extending the cuts is expected in the first week of March, sources have said, with individual countries expected to announce their decisions. Increasing possibilities of Saudi-led OPEC+ continuing with the supply cuts beyond the first quarter, potentially till the end of 2024, will likely keep oil prices above $80/bbl, said DBS Bank energy sector team lead Suvro Sarkar. Strong expectations of Saudi Arabia keeping term prices of crude it sells to Asian customers little changed in April from March levels also underpinned the market. Supporting prices, the Federal Reserve’s preferred inflation gauge, the US personal consumption expenditures (PCE) index, showed January inflation in line with economists’ expectations, reinforcing market bets for a June interest rate cut. This in turn could lower consumer costs and spur fuel buying activity. However, a mixed bag of February purchasing managers’ index (PMI) data from China, the world’s top oil consumer, capped price gains. China’s manufacturing activity in February contracted for a fifth straight month, an official factory survey showed on Friday, raising pressure on Beijing policymakers to roll out further stimulus measures as factory owners struggle for orders. “Demand side we concur that Q2 2024 will have hiccups and we are projecting Brent to average lower in Q2 2024 compared to Q1 2024, before rebounding in H2 2024 on the back of the potential rate cut scenario, which should boost fund flows towards riskier assets,” said DBS Bank’s Sarkar. Read: UAE hikes petrol, diesel prices for March 2024 Tags Brent China energy oil price OPEC Saudi Arabia You might also like Parsons wins $53m 3-year contract for roads programme in Riyadh Trump Organization doubles down on Saudi property market Informa’s Adam Andersen on how CPHI ME is building bridges in the pharma sector Apple announces major retail expansion in Saudi Arabia