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Published: March 29, 2024
Updated: March 29, 2024

Navigating the Surge: Crude Oil Prices Rally Ahead of OPEC Decision

Oil Prices Surge Amid Supply Tightening Speculations:

Crude oil prices soared by over $1 per barrel, signalling a bullish trend amidst anticipations of tighter supplies ahead of the awaited policy decision by the Organisation of Petroleum Exporting Countries (OPEC).

Market Dynamics: Brent Hits $87 as Investors Anticipate Supply Constraints

International crude oil prices rebounded vigorously, with Brent crude futures for May witnessing a robust increase of $1.21, reaching $87.30 per barrel. Similarly, the June contract surged by $1, marking a 1.2% rise to $86.41. The rally was further propelled by US West Texas Intermediate (WTI) crude futures, climbing $1.28 to $82.63 per barrel.

Week-on-Week Performance and Domestic Outlook:

Both benchmarks displayed a remarkable uptrend, surpassing a two per cent increase for the week. This consistent upward trajectory signals a third consecutive month of gains. In domestic markets, crude oil futures traded 1.76% higher at ₹6,895 per barrel on the multi-commodity exchange (MCX), reflecting the global surge.

Driving Factors: Insights into Price Movements

Despite last week's unexpected rise in US crude oil and gasoline inventories, driven by increased imports and sluggish demand, analysts foresee a less-than-normal inventory build, supporting Brent crude oil prices in the near future. Additionally, rising US refinery utilization rates contributed to the positive market sentiment.

Economic Indicators and Geopolitical Considerations:

The US economy's robust growth in the fourth quarter, surpassing previous estimates, further buoyed market optimism. Geopolitical tensions and the anticipation of potential supply disruptions added to the bullish sentiment, with investors closely monitoring the OPEC's Joint Monitoring Ministerial Committee meeting for further cues.

Outlook and Expert Analysis:

Market analysts emphasize the resilience of crude oil prices, attributing the firmness to additional supply cuts from Russia and prevailing geopolitical risk premiums. Pranav Mer, Vice President of EBG - Commodity & Currency Research at JM Financial Services Ltd., highlights the technical support levels and resistance, indicating a positive trend till key support levels remain intact.

Navigating Opportunities Amidst Market Volatility:

As crude oil prices surge amidst supply tightening speculations and geopolitical tensions, market participants navigate opportunities with cautious optimism. The resilience of prices, supported by supply constraints and geopolitical dynamics, underscores the importance of staying informed and adaptive in today's volatile market landscape.