Crude oil futures settled higher April 27 as OPEC and its allies, citing favorable market conditions, agreed to move ahead with plans to raise production levels in May.
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NYMEX June WTI settled $1.03 higher at $62.94/b, and ICE June Brent climbed 77 cents to $66.42/b.
The OPEC+ Joint Ministerial Monitoring Committee on April 27 backed previously agreed plans to boost crude oil output from May, delegates told S&P Global Platts. With the JMMC, co-chaired by Saudi Arabia and Russia, endorsing the plan, delegates said the full OPEC+ meeting scheduled for April 28 would be canceled.
It was the highest front-month settle for WTI since April 19, while Brent was last higher on April 20.
NYMEX May RBOB climbed 4.18 cents to settle at $2.0204/gal and May ULSD was up 2.72 cents at $1.9057/gal.
Analysts had largely expected the group to proceed with the production increases as planned, however, a recent surge of COVID-19 infections in India, Turkey, and elsewhere had added some uncertainty in recent days. But the alliance, which intends to pump some 2 million b/d more crude oil by July, largely from Saudi Arabia, is betting that improvements in the global economy will outweigh the surge of coronavirus cases in India, Brazil, and Japan.
"In the market, we see some optimism and positive dynamics in the indicators of population mobility and the recovery in demand from the largest consumer countries," Russian Deputy Prime Minister Alexander Novak said in his opening remarks to a key OPEC+ monitoring committee, which met prior to a teleconference with all ministers. "At the same time, we must closely monitor the situation and the spread of the coronavirus that is taking place, especially in some countries of the Asian region."
Kuwaiti oil minister Mohammed al-Fares said before the meeting the oil market was "witnessing a tangible improvement in the rates of demand with the distribution of vaccines and the continuation of stimulus policies by major global economies," according to state news agency Kuna.
"Powerful reflation signals, a weaker dollar, and a powerful recovery in US energy demand are all offering support to the complex despite a less supportive supply side," TD Securities analysts said in a note.
US crude oil inventory draws likely resumed during the week ended April 23 amid an expected uptick in refinery demand, an S&P Global Platts analysis showed April 26. Total commercial crude oil stocks are expected 200,000 barrels lower at around 492.8 million barrels, as refinery utilization climbs to around 85.3% of capacity, the highest since March 2020.
Oil had been trending higher overnight after the JMMC on April 26 reportedly revised its global demand outlook higher.
"Despite the situation in India, yesterday the Joint Technical Committee of OPEC+ reportedly increased their demand growth estimates to 6 million b/d for this year, up from 5.6 million b/d last month," ING Head of Commodities Strategy Warren Patterson and ING Senior Commodities Strategist Wenyu Yao wrote in a daily note April 27.
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