Crude oil futures edged higher Wednesday as U.S. crude inventories climbed, while OPEC+ contemplates prolonging its production cuts into the second quarter. The West Texas Intermediate contract for April ascended 28 cents, or 0.36%, to $79.15 a barrel. April Brent futures also saw a rise of 30 cents, or 0.36%, reaching $83.97 a barrel.
According to the American Petroleum Institute, U.S. crude stocks surged by 8.4 million barrels last week. This increase comes as refineries’ processing of crude into finished products has slowed in recent weeks.
Awaited this morning is the U.S. Energy Information Administration’s release of official government data on crude inventories.
Both U.S. crude and the global benchmark are on track for gains of 6.8% and 5%, respectively, for the month. Current first-month futures contracts are trading at a premium to later months, typically signaling a tightening crude market.
OPEC+ is contemplating extending its voluntary production cuts into the second quarter, according to sources cited by Reuters. Last November, the cartel and its allies agreed to slash 2.2 million barrels per day in the first quarter.
It is anticipated that OPEC’s cuts will curb downside risk to crude prices, while the cartel’s withheld spare capacity will limit upside risk. Goldman Sachs, in a research note published this week, suggests this dynamic will effectively maintain Brent in a $70 to $90 range.
Additionally, crude prices this month have found support from escalating tensions in the Middle East, with heightened conflicts on the Israel-Lebanon border and ongoing attacks by Houthi militants on commercial shipping in the Red Sea.
Goldman, however, views the geopolitical risk premium in oil prices as modest, as current conflicts have not significantly impacted crude production.
