U.S. Crude Oil Futures Hit $80/Barrel Amid Potential Market Tightening Ahead of OPEC+ Production Decision

The price of U.S. crude oil futures reached $80 a barrel for the first time in almost four months, indicating a potential tightening market as OPEC+ prepares to decide on production cuts. On Friday, the April West Texas Intermediate contract closed at $79.97 a barrel, a 2.19% increase or $1.71, marking the highest closing price since November 6. In addition, May Brent futures rose 2.09%, or $1.71, to reach $83.94 a barrel.

This marks the second consecutive monthly gain for both U.S. crude and the global benchmark, with near-month contracts trading at a premium to later months, a possible indication of a tightening oil market. According to three sources within the organization, OPEC+ is considering extending production cuts through the second quarter and possibly the end of the year, with a decision expected to be made in the first week of March.

The next formal Joint Ministerial Monitoring Committee meeting for OPEC is scheduled for April 3. Bank of America technical strategist Paul Ciana stated in a note to clients on Thursday that Brent crude futures could reach $95 per barrel in the second quarter, as bullish investors have become more aggressive in purchasing at higher lows.

He also noted that if Brent surpasses a resistance level of $85 per barrel, it will confirm an upward trend, but it must maintain a support level of approximately $80 a barrel in March. If it falls below this level, it could potentially drop to the bottom of its range at $73-$75 a barrel.

On a geopolitical level, negotiations for a ceasefire in the Israel-Hamas war are in jeopardy after numerous Palestinian casualties in Gaza City while waiting for humanitarian aid. During a news conference on Thursday, Israeli Prime Minister Benjamin Netanyahu stated that he rejects international pressure to end the war before achieving all of its goals.