Singapore — 0249 GMT: Crude oil futures edged higher during mid-morning trade in Asia March 30 as optimism over the OPEC+ coalition persisting with its supply cuts and expectations of increased downstream products demand supported the market, although a stronger US dollar limited the upside.
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At 10:49 am Singapore time (0249 GMT), the ICE Brent May contract was up 16 cents/b (0.25%) from the March 29 settle at $65.14/b, while the May NYMEX light sweet crude contract was 19 cent/b (0.31%) higher at $61.75/b.
Ahead of the April 1 OPEC+ meeting, the market brimmed with optimism that the producer group would roll over its April production quotas to May and keep supply in the market tight. Analysts have said this is the likely scenario, since demand-side concerns have continued to fester due to a resurgence of coronavirus infections in Europe and India.
"OPEC's cautious approach to the demand recovery saw it extend production curbs until April at the last meeting. Since then the outlook hasn't become any clearer," ANZ analysts said in a March 30 note, adding it was unlikely the coalition would raise production given that market sentiment has barely improved.
Despite an almost unanimous agreement among analysts that OPEC+ would defer any increase in production, a Saudi Arabian source told S&P Global Platts that a decision on the status of the cuts had not yet been made and that the speculation in the market was premature.
Meanwhile, indications of increased demand for jet fuel and gasoline in the US were also providing support to crude prices, according to a March 30 note by Avtar Sandu, senior commodities manager, at Phillips Futures.
"Nearly 1.6 million people passed through security at US airports on Sunday, the most in more than a year; Sunday marked the 18th straight day of more than 1 million people streaming through checkpoints," said Sandu, referencing data from the Transportation Security Administration.
Apple Mobility data showed that US driving activity rose 3.3% last week and was the strongest since the week ended Sept. 18.
Analysts said the market also gleaned a sliver of support from US President Joe Biden's multitrillion-dollar economic recovery plan, with details of the first part of the plan, focusing on infrastructure spending, expected later in the week.
However, oil prices were facing some headwinds due to the appreciation of the US dollar, which makes dollar-denominated assets like oil more expensive for buyers holding other currencies, and hence dampens their demand. At 10:41 am Singapore time, the June contract for the ICE US Dollar Index was trading at 92.92, up 0.156% from the previous close.
In inventory news, commercial US crude stocks are expected to have climbed 200,000 barrels to around 502.9 million barrels in the week ended March 26, with strengthened refinery demand and an uptick in exports likely holding back a seasonal build, analysts surveyed by Platts said. Weekly inventory reports from the American Petroleum Institute and the Energy Information Administration due for release later March 30 and on March 31, respectively.