Oil prices rose in Asian trade on Thursday as bets on tighter supplies, especially amid lower Russian production, put crude on course for a strong first quarter in 2024.
Crude prices saw two straight sessions of losses as an unexpected build in U.S. inventories and strong oil production in the country sparked some questions over just how tight markets will be in the coming months.
Strength in the dollar also weighed, as traders remained biased towards the greenback ahead of more cues on U.S. inflation and interest rate cuts.
But JPMorgan analysts said that signs of easing Russian crude production were likely to underpin oil prices, also presenting a path for Brent to test $100 a barrel by September.
Brent oil futures expiring in May rose 0.3% to $86.34 a barrel, while West Texas Intermediate crude futures rose 0.5% to $81.78 a barrel by 20:45 ET (00:45 GMT).
Tighter supplies see oil prices set for strong Q1
Brent and WTI prices were set for strong gains in the first quarter of 2024, and were trading up between 11% and 14% over the past three months.
Prices were boosted chiefly by a tighter outlook for markets, as Russia, Saudi Arabia and other members of the Organization of Petroleum Exporting Countries (OPEC) kept ongoing production curbs in place. Russia had earlier in March said it will deepen its ongoing production cuts, while fuel supplies in the country also shrank following a series of debilitating attacks by Ukraine on Russian fuel refineries.
Signs of little de escalation in the Israel-Hamas war, which presented geopolitical disruptions for the broader Middle East region, also underpinned oil prices, as did persistent supply disruptions stemming from Houthi attacks on ships in the Red Sea.
Russian production cuts to boost oil prices, US a potential hurdle- JPM
JPMorgan analysts said that Russia’s recent commitment to deepening its production cuts presented a tighter outlook for crude markets in the coming months, and also presented a path for Brent to reach $100 a barrel later in the year.