For the second month in a row**, the market expects oil alliance OPEC+ to extend its production cuts, while the latest inflation data released on Thursday was in line with expectations.
On Thursday, the Federal Reserve's preferred inflation gauge suggested that a gradual rate cut this year was still on the table. Lower interest rates stimulate economic activity, which is good for demand.
West Texas Intermediate** (Cl=F) and Brent** (Bz=F) were essentially flat on the last day of February, closing at 78 per barrel, respectively$26 and $83$62. The United States *** this month ** about 3 .
Since the start of 2024, the West Texas Intermediate has been around 9, while Brent has been more than 8 after a volatile start to the year.
Despite the fifth consecutive week of rising inventories, higher-than-expected demand in Asia, coupled with market expectations that OPEC+ will extend its production cut plan, helped keep the month's highs high.
Rebecca Babin, a senior U.S. energy trader at CIBC Private Wealth, recently told Yahoo Finance: "OPEC+ will be very slow to remove production cuts. "I don't think OPEC+ will rush this decision unless the market shows a significant reduction in inventories and Brent is close to $90. This will make the market more nervous than most analysts currently expect on paper. ”
The Organization of the Petroleum Exporting Countries (OPEC) and its allies have implemented production cuts totalling about 2 million barrels per day. A large part of this is a unilateral production cut in Saudi Arabia.
Demand is likely to rise again in 2024** as China continues to spur economic growth.
"Despite the increase in storage and the confirmation of recent (non-OPEC) record production, global demand has exceeded expectations, particularly from Asia, mainly India," Dennis Kissler, senior vice president at Bok Finance, said in a memo on Thursday. ”
In addition, traders reacted to the ongoing escalation of the situation in the Middle East over the past two months.
The attacks on ships by Iranian-backed Houthi rebels who support the Palestinians on the Red Sea coast have prompted major oil tankers to avoid the area connected to the Suez Canal, which is an important passage between Asia and Europe.
Analysts are watching for any possible expansion into the Strait of Hormuz, which lies between Oman and Iran. This waterway is considered one of the world's largest oil strategic locations.
Goldman Sachs analysts wrote this week: "While the disruption of Red Sea shipping due to the escalation of the war in the Middle East has only a minor impact on energy**, the possible closure of the Strait of Hormuz would have a more significant impact on energy** and could reduce global growth." ”
Analysts at the bank recently reiterated their interest in Brent's range of $70-$90 per barrel this year, noting that "geopolitical factors remain a risk."
HTFX analysts believe that behind the **persistence** is the market's expectation that OPEC+ will extend its production cut measures and the increase in demand in Asia. Despite the rise in inventories, geopolitical factors and the escalation of the situation in the Middle East have also had an impact on the market. In the future, investors need to pay close attention to the development of the situation in the Strait of Hormuz and other regions, as well as the impact of global economic growth on ** demand.