Oil prices rose in early trading on Friday after OPEC+ decided to maintain its oil production policy unchanged, even though benchmark crude oils are set to incur weekly losses amid unconfirmed reports of a ceasefire between Israel and Hamas.
By 0415 Greenwich Mean Time, Brent crude futures rose by 37 cents, or 0.5 percent, to $79.07 per barrel. Similarly, West Texas Intermediate futures for American crude oil increased by 30 cents, or 0.4 percent, to $74.12 per barrel.
Two sources from OPEC+ stated on Thursday that the group had kept its oil production policy unchanged and will decide in March whether or not to extend the current voluntary oil production cuts in the first quarter.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia known as OPEC+, have committed to production cuts of 2.2 million barrels per day in the first quarter, in line with the announcement made in November.
According to analysts at A.E.Z. research in a memorandum on Friday, these production reductions will keep supplies limited in the first quarter, with production from outside OPEC returning to its normal levels after the increases and a slowdown in US production growth in 2024 to 300,000 barrels per day from 800,000 barrels per day last year.
The prices of oil received support from the decision of the Federal Reserve to keep the overnight benchmark interest rate in the range of 5.25 to 5.50 percent, and comments from its Chairman Jerome Powell who stated that interest rates have peaked and will decrease in the coming months.
The decrease in interest rates is expected to lower the borrowing costs for consumption, which could enhance economic growth and increase demand for oil.
However, oil prices are expected to record a weekly loss of about five percent as unconfirmed reports of a ceasefire between Israel and Hamas deterred gains and caused oil to drop by more than two percent at Thursday’s close.
According to Brianka Sashdiva, senior market analyst at Philip Nova, the latest reports on progress towards a prolonged ceasefire between Israel and Hamas, which could alleviate current geopolitical pressures, are making oil investors monitor the situation.
Sashdiva also added that Russian oil tankers have continued to sail through the Red Sea without being significantly attacked by the Houthis, which contradicts the belief in markets of widespread disruptions in global oil supplies.
In the latest tensions related to shipping, the Houthi group announced on Thursday that their naval forces targeted a British merchant ship in the Red Sea.
Reuters
