World Oil Prices Strengthen Amid Supply Tightening

Illustration of oil refineries (Photo: dock. Antara)

JAKARTA - World crude oil prices experienced a strengthening at the end of trading Friday, March 31. This is because traders focus on strict supply problems in parts of the world as well as US inflation data indicating price increases are slowing.

West Texas Intermediate (WTI) crude futures for May delivery rose 1.3 dollars, or 1.75 percent, to settle at 75.67 dollars a barrel on the New York Mercantile Exchange.

Brent crude futures for May delivery added 50 cents, or 0.63 percent, to close at 79.77 dollars a barrel on the London ICE Futures Exchange.

Market movement is driven by fears triggered by turmoil in the banking sector in general has eased, and oil players are paying attention to supply tightening.

"Traders remain focused on the situation in Kurdistan," as "the area's exports were recently suspended, and producers were forced to close production in several oil fields," said Vladimir Zernov, analyst with market information supplier FX Empire, Friday (31/3/2023).

For this week, US crude benchmarks jumped 9.25 percent, while Brent rose 6.37 percent, based on next month's contract. Despite the recent increase, WTI and Brent recorded a 1.8 percent and a 4.9 percent monthly drop, respectively, according to Dow Jones Market Data.

Meanwhile, data on Friday (31/3/2023) showed the US Private Consumption Expenditure Index (PCE), an inflation gauge preferred by the Federal Reserve, up 0.3 percent in February compared to an increase of 0.6 percent in January and lower analyst expectations for an increase of 0.4 percent.

Signs of slowdown in inflation tend to support oil prices as this could indicate less aggressive interest rates from the Fed, raising investor demand for risk assets such as commodities and equity.

With prices recovering from its recent lows, the Organization of the Petroleum Exporting Countries and allies led by Russia is likely to stick to the existing production deals at Monday's meeting (3/3/2023), sources said.