The markets are being underpinned by and OECD forecast for the global economic recovery and by OPEC+ production cuts. Gains are perhaps being limited, however, by an unexpected rise in U.S. inventories.
OECD Interim Economic Outlook
The pandemic-hit global economy is set to rebound with 5.6% growth this year and expand 4% next year, the Organization for Economic Cooperation and Development (OECD) said in its interim economic outlook. Its previous forecast had been for growth of 4.2% this year.
“When it comes to lifting market sentiment, there is very little that can rival an upgrade to the post-COVID economic recovery,” said Stephen Brennock of broker PVM.
Prices are likely to continue to be supported by the decision by OPEC and its allies to largely maintain production cuts in April. This news basically eliminated the fear of a price crash so traders aren’t getting nervous about price dips. They are viewing them as buying opportunities. Therefore, finding value has become the key issue.
Saudi Foreign Minister Prince Faisal bin Farhan Al Saud on Wednesday that Saudi Arabia and Russia were keen for fair oil prices and will continue their cooperation in the framework of the OPEC+ group.
American Petroleum Institute Weekly Inventories Report
U.S. crude inventories rose by 12.8 million barrels in the week to March 5, trading sources said, citing data from industry group the American Petroleum Institute. Analysts polled by Reuters had expected a build of about 800,000 barrels.
At 15:30 GMT, the U.S. Energy Information Administration (EIA) will release its weekly inventories report today. Traders are looking for a build of about 3 million barrels, down considerably to last week’s 21.6 million barrel figure.
Higher prices are also expected to bring more U.S. supplies back online. However, U.S. crude production is still expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.15 million bpd, the EIA said on Tuesday. Its previous monthly forecast was for a drop of 290,000 bpd.
There are headwinds facing the market at this time. Prices remain under pressure from a combination of factors including top importers China and India drawing crude from storage at current high prices and expectations of a return of Iranian supplies, analysts said.
For a look at all of today’s economic events, check out our economic calendar.