Brent extends gains on global supply concerns

The front-month ICE Brent contract gained $0.29/bbl on the day, to trade at $82.76/bbl at 09.00 GMT. PHOTO: Getty Images

Upward pressure:

Global supply concerns continued to support Brent futures.

Organization of the Petroleum Exporting Countries (OPEC) and its allies are expected to extend voluntary production cuts into the second quarter of this year, Reuters reported citing sources.

Brent’s price surged “in response to media reports suggesting that the Organization of the Petroleum Exporting Countries (OPEC) and Russia-led producers are contemplating extending the current output cuts,” said SPI Asset Management’s managing partner Stephen Innes.

Meanwhile, Brent futures also gained after Russia announced a six-month ban on all gasoline exports starting 1 March, due to planned refinery maintenance work, state-owned media agency TASS reported.

“The decision may have been influenced by unplanned refinery outages in Russia, possibly exacerbated by escalating drone attacks from the Ukrainian military,” Innes added.

Downward pressure:

Downward pressures acting on Brent futures today include another whopping build in the US crude stocks, noted by the American Petroleum Institute (API).

US commercial crude inventories increased by 8.42 million bbls in the week ended 23 February, according to API figures. This week’s inventory growth, as per the API data, marked the fourth consecutive week of rise in US crude stocks, indicating a lacklustre demand growth in one of the world’s largest oil consuming nations.

Meanwhile, Wafa oil field in western Libya resumed operations on Tuesday, after remaining closed over the weekend due to protestors demanding better wages, Bloomberg reported.

The oil field produces around 40,000 – 45,000 b/d of crude oil.

By Aparupa Mazumder

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