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26 March 2024 | FXGT.com

WTI Crude Futures Reach $82 driven by Supply Disruption Fears

  • WTI Crude Futures Gain Momentum: WTI crude futures reached $82 per barrel, elevated by ongoing supply concerns. The bullish momentum is highlighting the market’s sensitivity to supply disruptions.
  • Impact of Ukrainian Attacks: Ukrainian strikes on Russian oil refineries have compromised around 12% of Russia’s oil refining capabilities, adding to the supply-side pressures on global oil markets.
  • Russian Production Cuts: In adherence to an OPEC agreement, Russia has mandated its oil companies to scale back production to 9 million barrels per day for the second quarter, following February’s output of approximately 9.5 million bpd. This decision followed in the wake of drone attacks targeting Russian oil facilities.
  • Middle East Tensions: Despite the UN Security Council’s resolution advocating for a ceasefire between Israel and Hamas, there remains skepticism about its effectiveness in halting Houthi assaults on Red Sea shipping lanes, which are crucial for oil supply continuity. The ongoing conflict introduces a geopolitical risk premium to oil prices.
  • OPEC+ Supply Policy: According to reports, OPEC+ believes no changes are needed in their current oil supply policy, suggesting their measures are effectively preventing a supply surplus.
  • Upcoming OPEC+ Meeting: Delegates from OPEC+ are set to convene next week to review the progress and impact of the output reduction agreement that was initiated late last year, intended to last until the end of June.
  • US Dollar Weakness Supports Oil Prices: The slight weakening of the U.S. dollar provides some backing for oil prices, as it makes oil cheaper for holders of other currencies, potentially boosting demand.
  • Market Anticipation for U.S. Inflation Data: Investors are now keenly awaiting the upcoming U.S. inflation data release on Friday. This data is expected to provide additional insights into the likely timing of the anticipated Federal Reserve rate cuts.
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