Market Analysis

The price of West Texas Intermediate (WTI) oil has been steadily rising for the third consecutive session, reaching around $83.10 per barrel during Monday's Asian trading hours. This upward trend is primarily attributed to expected supply constraints due to production cuts by the Organization of the Petroleum Exporting Countries and their allies (OPEC+).

Investors are eagerly awaiting the upcoming joint ministerial meeting of OPEC+ scheduled for this week. It is anticipated that during this meeting, OPEC+ will evaluate market fundamentals and members' adherence to production targets, with most expecting the current output policies to be maintained.

Additionally, Russian Deputy Prime Minister Alexander Novak stressed on Friday the importance for oil companies to prioritize reducing output over exports in the second quarter to align with OPEC+ production targets. He also stated that there is no need for Russia to implement export bans on diesel to address rising prices and potential fuel shortages caused by drone attacks disrupting refining capacity.

Ukrainian drone strikes have significantly impacted several Russian refineries, resulting in a decrease in Russia's fuel exports. These attacks have rendered nearly 1 million barrels per day of Russian crude processing capacity inactive.

Official data indicates that Chinese manufacturing activity expanded for the first time in six months in March, which has positively influenced the outlook for crude oil demand in the world's leading crude importer. Analysts at Goldman Sachs observed that oil demand in Europe surpassed expectations, with a year-on-year increase of 100,000 barrels per day recorded in February, contrary to their earlier projection of a 200,000 barrels per day decline for 2024.

Paraphrasing text from "FX Street" all rights reserved by the original author.