Oil prices rose more than 1% on Friday, extending gains from the previous session after OPEC and its allies agreed not to increase supply in April as they await a more substantial recovery in demand amid the coronavirus pandemic.
Brent crude futures for May rose 83 cents, or 1.2%, to $67.57 a barrel at 0609 GMT and was on track for a 2% gain in the week.
U.S. West Texas Intermediate (WTI) crude futures were up 77 cents, or 1.2%, to $64.60 per barrel.
OPEC+ Increase Oil Supply
Both contracts surged more than 4% on Thursday after the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, extended oil output curbs into April, granting small exemptions to Russia and Kazakhstan.
Michael McCarthy, the chief market strategist at CMC Markets, said the decision by OPEC+ showed how disciplined they were.
“What makes the gain even more impressive is that it comes against a risk-off backdrop and a higher U.S. dollar,” he added.
Oil prices slump when the dollar rises as a higher greenback makes oil more expensive for buyers with other currencies.
Investors were surprised that Saudi Arabia had decided to maintain its voluntary cut of 1 million barrels per day through April even after oil prices rallied over the past two months.
“An array of factors coalesced to bring the parties together, but the resultant price increase will almost certainly push the parties to change their minds when they meet again on April 1, 2021,” commodity analysts at Citigroup said in a note.
OPEC has indicated that more than 2 million barrels per day (BPD) of oil will be required in the market by the end of June. That need starts by mid-to-late April, as refinery demand for crude starts growing before escalating through August this year.
Analysts are reviewing their price forecasts to reflect the continued supply restraint by OPEC+ and U.S. shale producers, who are holding back spending to boost returns to investors.