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  • WTI is lower on the final trading day of the month amid a stronger USD, but remains support above $62.00.
  • It’s been a good month for crude oil markets, mainly driven by demand outlook optimism.

A buoyant US dollar into the month-end is weighing on USD-priced crude oil markets on the final trading day of the week. On the day, front-month futures contracts for the American benchmark for sweet light crude, called West Texas Intermediary or WTI, have slipped more than $1.0 and back into the low $62.00s, though have remained supported above the $62.00 mark. At current levels around $62.25, WTI trades a little more than $1.50 off Thursday’s cycle highs of just shy of the $64.00 mark, so Friday’s selling will not be looked at as anything more than a normal technical correction.

It’s been a good month for crude oil markets; WTI is about to end the month with gains of just under 20% and Brent gains of about 18.5%. WTI outperformance versus Brent makes sense in the context of the weather disruptions to US crude oil production, which did not happen in the North Sea (where Brent is extracted and priced). Driving this month’s upside has mainly been optimism surrounding the demand outlook; vaccine rollouts, economies reopening after the Winter Covid-19 spike and more expectations for another large dose of US fiscal stimulus are all driving expectations for a rapid global economic recovery (and recovery in crude oil demand).

Looking ahead, key data points out of the US economy will keep some crude oil market focus on the state of the recovering global economy, but eyes will also be on OPEC+, who convene to decide whether to increase oil output quotas from April. How much supply the cartel elects to bring back online is likely to be heavily influenced by how much of the Saudi Arabian’s temporary 1M barrel per day cut which is scheduled to end in April they decide to continue. Most think the Saudis will completely end their 1M barrel per day voluntary cut, which limits the scope to OPEC+ to increase output if the cartel wants to avoid a negative crude oil market reaction.


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