Oil rose in price by 5% against the backdrop of OPEC+'s decision to cut production

The OPEC+ countries have already announced a reduction in oil production by approximately 1.15 million barrels/day since May in order to stabilize prices on the market, although a few days before the cartel meeting, neither the media nor analysts saw any signs of future changes.

So, Saudi Arabia will reduce production by 500,000 barrels/day, Kuwait – by 128,000 barrels/day, Oman – by 40,000 barrels/day, Algeria – by 48,000 barrels/day, Kazakhstan – by 78,000 barrels/day, and Russia will continue to cut production by 500,000 barrels/day until the end of 2023. We will remind that the Russian Federation announced a unilateral production cut after the introduction of price restrictions by Western countries in February, after which the average price of oil, the main Russian brand Urals, fell to 49.56 $/barrel, which is 1.86 times less than in February 2022.

Currently, OPEC+ includes Algeria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Republic of Congo, Saudi Arabia, UAE and Venezuela.

June futures for Brent oil on the London ICE exchange rose by 1.9% on Friday, and on the weekend against the background of the OPEC decision - by another 5% to $83.9/barrel, and for WTI oil on the New Commodity Exchange -York - on Friday by 1.6%, and at the weekend by another 4.8% to $79.4/barrel.

Friday's news from China indicates the recovery of the country's economy, which contributes to the activation of demand for energy carriers and the growth of oil prices.

Forecasts of increased demand for crude oil in China are supporting prices. The country's largest oil refinery - China National Petroleum Corp. predicts that as the pandemic is overcome, oil demand will grow by 5.1% year-on-year to 756 million tons. Although demand has been low recently, car sales in the country in January-February were 9.4% less than last year, and international flights as of March 16 were only 22% of the pre-pandemic level.

Oil prices are also supported by increased demand for crude oil in India, which rose 8.5% year-on-year in February to a 7-month high of 19.1 million tonnes.

Following oil prices, May soybean oil futures in Chicago rose by 2% on Friday and by another 1.4% over the weekend to $1,240/t (+5.5% for the week).