Investing.com -- Crude oil prices surged Friday, climbing to fresh one-year highs, after a group of top producers agreed not to increase supply in April, taking a cautious stance on the global economic recovery.
By 10 AM ET (1500 GMT), U.S. crude futures traded 3% higher at $65.77 a barrel, rising above $65 for the first time since January 2020, while the international benchmark Brent contract rose 3.2% to $68.90, also at its highest level since the start of last year.
U.S. Gasoline RBOB Futures were up 2.5% at $2.0484 a gallon, the first time above $2 since January 2019.
These gains followed the decision of the Organization of Petroleum Exporting Countries and its allies including Russia, a grouping known as OPEC+, to extend its output curbs into April, only granting small exemptions to Russia and Kazakhstan.
This move surprised a number of traders, particularly with Saudi Arabia agreeing to maintain its voluntary additional cut of 1 million barrels per day through April even after oil prices had rallied to over $60 a barrel from below $40, when it decided on the need to reduce global supply.
Analysts at influential investment bank Goldman Sachs (NYSE:GS) responded to this decision by lifting its second-quarter and third-quarter forecasts for Brent by $5 each to $75 and $80 a barrel, respectively.
“Although members discussed Covid demand risks, our takeaway from the press conference is that the discipline of shale producers is likely behind this slower increase in production,” the bank said in a note.
The OPEC+ members appear to believe that U.S. oil production will struggle to respond to the higher price environment in the near term, particularly after the damage caused by the recent wintry snap.
“If this is the attitude that OPEC+ are taking it does suggest that they believe they can push prices even higher, without the risk of losing market share,” said analysts at ING, in a research note. “And would not be surprised to see Brent testing US$70/bbl ahead of the next OPEC+ meeting” at the start of April.
Ahead of that, focus will turn to the Baker Hughes’ rig count data later Friday. The number of active rigs has picked up somewhat in recent months but remains nowhere near the level analysts say is necessary to generate a meaningful rise in output.