Oil surges after OPEC+ holds cuts, strong US jobs
NEW YORK — Oil prices jumped about 3% on Friday, hitting their highest levels in more than a year, following a stronger-than-expected US jobs report and a decision by OPEC and its allies not to increase supply in April.
Brent futures rose $2.62 or 3.9% to settle at $69.36 a barrel. The session high for the global benchmark was its highest since Jan. 2020.
US West Texas Intermediate (WTI) crude rose $2.26. For the week, Brent gains 5.2% gain, WTI up 7.4% or 3.5% to settle at $66.09 a barrel.
For the week, Brent was up 5.2%, rising for a seventh week in a row for the first time since December, while WTI was up about 7.4% after gaining almost 4% last week.
Both contracts surged more than 4% on Thursday after the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, extended oil output curbs into April, granting small exemptions to Russia and Kazakhstan.
“OPEC+ settled for a cautious approach... opting to increase production by just 150,000 barrels per day (bpd) in April, while market participants looked for an increase of 1.5 million bpd,” said UBS oil analyst Giovanni Staunovo.
Investors were surprised that Saudi Arabia had decided to maintain its voluntary cut of 1 million bpd through April even after the oil price rally of the past two months on the back of COVID-19 vaccination programs around the globe.
Some forecasters revised their price expectations upward following the OPEC+ decision.
Goldman Sachs raised its Brent crude price forecast by $5 to $75 a barrel in the second quarter and $80 a barrel in the third quarter of this year. UBS raised its Brent forecast to $75 a barrel and WTI to $72 in the second half of 2021.
In addition, the market got a boost after a report showed the US economy created more jobs than expected in February.
The nonfarm payroll report “shows that Americans are closer to pre-pandemic behavior that will drive strong demand for crude,” said Edward Moya, senior market analyst at OANDA in New York. —