Oil Prices Rebound as OPEC+ Expected to Maintain Production Cuts

Oil prices regained ground on Thursday, reversing two consecutive sessions of decline, as investors anticipated tighter supplies amid expectations that the OPEC+ producer alliance would continue with its current production cuts.

Brent crude futures for May climbed $1.23, or 1.4%, to reach $87.32 a barrel, while the June contract rose 90 cents, or 1.1%, to $86.31 at 1348 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude futures for May delivery were up $1.03, or 1.3%, at $82.38 a barrel.

Both Brent and WTI benchmarks were poised to finish higher for the third consecutive month, reflecting ongoing market strength.

The previous session saw oil prices facing pressure from an unexpected increase in U.S. crude oil and gasoline inventories, attributed to a rise in crude imports and subdued gasoline demand. However, the actual crude stock build was smaller than anticipated by the American Petroleum Institute, and analysts observed that the increase was lower than usual for the time of year. Moreover, the uptick in U.S. refinery utilization rates provided further support to prices.

Meanwhile, remarks from a Federal Reserve governor affirmed the case for the central bank to hold off on cutting its short-term interest rate target, based on recent inflation data. However, the governor did not rule out the possibility of rate cuts later in the year, keeping investors vigilant.

Market focus now shifts to the upcoming meeting of the Joint Monitoring Ministerial Committee of the Organization of Petroleum Exporting Countries (OPEC), where investors will seek clues regarding the alliance’s production policy. Although geopolitical tensions have heightened expectations of potential supply disruptions, OPEC+ is expected to maintain the status quo until a full ministerial gathering scheduled for June.