Oil prices jumped more than 2% on Friday, hitting their highest in nearly 14 months after OPEC and its allies agreed not to increase supply in April as they await a more substantial recovery in demand.
Brent crude futures were up $1.52, or 2.3%, at $68.26 a barrel by 1008 GMT and U.S. West Texas Intermediate (WTI) crude futures climbed $1.30, or 2%, to $65.13 as both remained on track for weekly gains.
Both contracts surged more than 4% on Thursday after the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, extended oil output curbs into April, granting small exemptions to Russia and Kazakhstan.
“OPEC+ settled for a cautious approach … opting to increase production by just 150,000 barrels per day (bpd) in April while market participants looked for an increase of 1.5 million bpd,” said UBS oil analyst Giovanni Staunovo.
Investors were surprised that Saudi Arabia had decided to maintain its voluntary cut of 1 million bpd through April even after the oil price rally of the past two months on the back of COVID-19 vaccination programmes around the globe.
“An array of factors coalesced to bring the parties together, but the resultant price increase will almost certainly push the parties to change their minds when they meet again on April 1,” Citigroup said in a note.
Analysts are reviewing their price forecasts to reflect the continued supply restraint by OPEC+ as well as U.S. shale producers, who are holding back spending to boost returns to investors.
Goldman Sachs raised its Brent crude price forecast by $5 to $75 a barrel in the second quarter and $80 a barrel in the third quarter of this year. UBS raised its Brent forecast to $75 a barrel and WTI to $72 in the second half of 2021.