Oil extends gains on OPEC+ supply restraint


Warning: This material has been prepared by a third party company, Reuters, which is independent of Davy. Davy has not reviewed the material and accepts no responsibility for errors or omissions, or for the information or opinions contained therein. It does not constitute investment advice.

    By Sonali Paul
    MELBOURNE, March 5 (Reuters) - Oil prices rose early on
Friday, adding to big gains overnight after OPEC and its allies
agreed to not increase supply in April as they await a more
solid recovery in demand from the coronavirus pandemic.
    U.S. West Texas Intermediate (WTI) crude  CLc1  futures
climbed 17 cents, or 0.3%, to $64.00 at 0128 GMT, holding below 
a 13-month high hit on Thursday. 
    Brent crude  LCOc1  rose 10 cents, or 0.2%, to $66.84 a
barrel, but down from a high of $67.75 hit on Thursday.
    Both contracts soared more than 4% on Thursday after the
Organization of the Petroleum Exporting Countries and allies,
together called OPEC+, extended oil output curbs into April,
with small exemptions to Russia and Kazakhstan.  urn:newsml:reuters.com:*:nL2N2L20UQ
    "It just goes to show how much of a surprise the OPEC+
discipline is," said Michael McCarthy, chief market strategist
at CMC Markets.
    "What makes the gain even more impressive is that it comes 
against a risk-off backdrop and a higher U.S. dollar," he said.
    Oil prices usually fall when the dollar rises as a higher
greenback makes oil more expensive for buyers with other
    Investors were surprised that Saudi Arabia had decided to
maintain its voluntary cut of 1 million barrels per day through
April even after oil prices rallied over the past two months.
    "The group's supply discipline shows that Saudi Arabia's
preference for caution is being adhered to," Commonwealth Bank 
commodities analyst Vivek Dhar said in a note.
    Analysts are reviewing their price forecasts to reflect the
continued supply restraint by OPEC+ as well as U.S. shale
producers, who are holding back spending in order to boost
returns to investors.
    "Oil prices could rip higher now that a tight market is
likely up through the summer. WTI crude at $75 no longer seems
outlandish and Brent could easily top $80 by the summer," OANDA
analyst Edward Moya said in a note.

 (Reporting by Sonali Paul; Editing by Himani Sarkar)
 ((Sonali.Paul@thomsonreuters.com; +61 407 119 523))

Warning: This content may be provided by regulated and unregulated entities and is not created, reviewed or endorsed by Davy. It is provided for general information purposes only and does not constitute a recommendation or solicitation to purchase or sell any security or make any other type of investment or investment decision. Importantly, it does not constitute investment advice, as it does not contemplate the personal circumstances of any particular person or group of persons. Neither Davy nor the providers of the Third Party Content will be liable for any investment decision made based on the reliance on or use of such data, or any liability that may arise due to delays or interruptions in the delivery of the Third Party Content for any reason.