Oil edged higher, extending a rally that has brought prices to a five-month high, after OPEC+ ministers affirmed current supply cuts.
Brent rose to within one cent of the $90-a-barrel
psychological level on Wednesday after OPEC and its allies didn’t recommend any
changes to their existing output cuts at an online ministerial review meeting.
The move means roughly 2 million barrels a day of curbs will be in place until
the end of June.
In the US, a government report showed nationwide crude
stockpiles rose 3.21 million barrels last week, contrasting with an industry
group’s projection of a drop in inventories. The official US figures showed a
decline in gasoline stockpiles.
Still, bullishness is showing up beyond front-month futures
prices, with oil options traders increasingly looking to protect against rising
prices. Brent’s second-month options skew has flipped from its usual put skew —
favored by producers seeking to protect against price drops — to a bias toward
calls. That comes as timespreads move further into backwardation, another
indicator of strength.
Crude has pushed higher this year, with Ukrainian attacks on
Russian energy infrastructure and Middle East tensions supporting prices.
OPEC+’s curbs have been tightening the market, while there have been patches of
disruption elsewhere, including an early-year deep freeze in the US and a
recent curb to exports by Mexico.
However, the recent surge in prices is already drawing the
ire of major consumers. A top Indian oil official said on Wednesday that the
recent gain was causing anxiety and that companies would have to act if higher
prices are sustained.
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