Oil Heads for Quarterly Advance as OPEC+ Holds the Line on Cuts

Oil climbed to head for a solid quarterly gain on expectations that OPEC+ supply cuts would tighten the global market, Bloomberg reported.

West Texas Intermediate futures rose to near $82 a barrel after a modest two-day drop, with Brent crude above $86. The US crude benchmark has risen 14% this year, with key time spreads swinging from contango — a bearish pattern — to the opposite backwardation structure in that span.

OPEC+’s 2 million barrels a day cuts have been extended to the end of June, underpinning expectations that global stockpiles will shrink. According to several officials, delegates saw no need to recommend any changes ahead of a review meeting next week as quotas were proving effective.

Crude’s revival in the first quarter has also been aided by Ukraine’s drone strikes on Russian energy infrastructure, geopolitical tensions in the Middle East, and demand growth in Asian economies, including India. Still, this week’s data show an increase in US nationwide crude and gasoline stockpiles, which has undercut some of the tightness, with the non-OPEC+ oil supply continuing to expand.

The bullish backdrop has spurred some banks to warn there’s scope for higher prices, depending on how events pan out. While sticking with existing forecasts, JP Morgan Chase & Co. said this week there’s a path for Brent to hit triple-digits by September if the impact of Russia’s production cuts isn’t balanced out by other counter-measures.

There’s increased bullishness as “demand conditions remain firmer than expected in the US and China,” said Han Zhong Liang, investment strategist at Standard Chartered Plc. China is looking “increasingly positive following recent data releases,” and the OPEC+ cuts are also limiting supply.