SINGAPORE, April 17 (Reuters) – Oil prices saw a further increase on Thursday, supported by tighter supply expectations following new U.S. sanctions on Iranian oil and additional output cuts pledged by some OPEC producers to offset overproduction.
Brent crude futures climbed by 56 cents, or 0.85%, to $66.41 a barrel by 0625 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude rose by 65 cents, or 1.04%, to $63.12 a barrel. Both benchmarks closed 2% higher on Wednesday, marking their highest levels since April 3. The prices are on track for their first weekly gain in three weeks, with Thursday being the final settlement day before the Good Friday and Easter holidays.
The rally is attributed to several factors, according to IG market analyst Tony Sycamore. These include short-covering, a weaker U.S. dollar, which makes crude oil cheaper to purchase, and increased U.S. pressure on Iran.
Sycamore noted that WTI could rise to $65-$67 a barrel but may face challenges in pushing higher. “If we assume U.S. growth remains flat over the next two quarters and China’s GDP growth slows to 3%-4%, this is not good for crude oil,” he said.
The U.S. administration, led by President Donald Trump, imposed new sanctions on Iran’s oil exports on Wednesday. The sanctions targeted a China-based “teapot” refinery, adding more pressure on Tehran amid discussions over the country’s nuclear program.
Additionally, the Organization of the Petroleum Exporting Countries (OPEC) announced on Wednesday that countries like Iraq and Kazakhstan had submitted updated plans to implement further output cuts to compensate for exceeding production quotas.
Michael McCarthy, CEO of online investment platform Moomoo, commented, “These factors have likely influenced market sentiment. While Iranian production may not be a major factor, OPEC quotas are often exceeded rather than followed, but both elements have contributed to a more positive market outlook.”
The market also received support from significant reductions in U.S. gasoline and distillate inventories, along with a smaller-than-expected increase in weekly crude stocks.
McCarthy pointed out that the recent pressure on global crude markets was largely due to concerns about a surge in U.S. oil exports. However, the drop in refining activity suggests that supply bottlenecks may be emerging.
Despite the rally, OPEC, the International Energy Agency (IEA), and several financial institutions, including Goldman Sachs and JP Morgan, have downgraded their oil price and demand growth forecasts this week. The ongoing trade tensions, including U.S. tariffs and retaliatory actions from other countries, have contributed to the uncertainty in global trade.
The World Trade Organization (WTO) also revised its trade forecast, now expecting global trade in goods to contract by 0.2% this year, down from an earlier projection of a 3.0% growth.
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