Oil prices reach 14-month high after OPEC+ continues to cut production

Oil prices rose more than 2% on Friday to reach a 14-month high after OPEC and allies agreed not to increase their oil supply in April pending a further recovery in market demand, sending Brent crude oil futures contracts to rise $1.75, or 2.6%, to $68.49 per barrel.

WTI crude oil futures also rose $1.49, or 2.3%, to $65.32 per barrel, and the two companies’ contracts rose 4% on Thursday after the extension of OPEC and its allies called OPEC+, to cut production through April while giving Russia and Kazakhstan minor waivers, OPEC+ chose to increase production by only 150,000 bpd in April, while its market partners were expecting to increase production by 1.5 million bpd.

Investors were surprised by the decision of the Kingdom of Saudi Arabia to continue to voluntarily reduce its production capacity to 1 million barrels per day during April, despite the increase in oil prices during the past two months against the background of the work of vaccines programs for Covid-19 virus around the world.

Analysts revised their price prediction to reflect the consequences of continued OPEC+ restrictions as well as US shale producers who are cutting back on spending to increase investor returns.

Goldman Sachs raised its prediction for Brent crude oil by $5 to $75 per barrel in the second quarter and $80 per barrel in the third quarter of this year, and UBS also raised its prediction for Brent oil to $75 per barrel and the price of WTI oil to $72 per barrel during the second quarter of 2021.

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