Crude oil prices rallied to a four-month high in mid-April as further evidence emerged of accelerating declines in US output, while market participants held out hope that upcoming producer talks would agree a deal to help manage a still massive supply overhang,'' the International Energy Agency (IEA) said in its Monthly Outlook released Thursday.
''Crude oil prices strengthened into mid-April – reaching a four-month high approaching $45/bbl - on more signs of hastening declines in US supplies after still more rigs were taken out of action and high hopes that a producer meeting on 17 April in Qatar would agree a deal to limit production. If a deal is struck, however, it is unlikely to speed up a rebalancing of the oil market – especially during the first half of the year,'' the EIA noted.
''A weaker US dollar is also propping up oil prices as it makes purchases of dollardenominated oil cheaper for countries using other currencies, the monthly outlook added.
Of the global benchmarks, US WTI posted the strongest month-on-month (m-o-m) performance in March, rising $7.38/bbl to $37.76/bbl as more drilling rigs were taken out of action. North Sea Dated Brent climbed $6.03/bbl over February to average $38.49 /bbl for the month. Russian Urals gained $5.99 /bbl m-o-m to average $36.85 /bbl in March. Middle East Dubai rose by a similar amount to average $35.12/bbl in March.
West African crude sales to China are due to breach 1 mb/d during April due to heavy buying from Angola. Demand from China is expected to remain strong for West African cargoes loading in May, which will arrive in June following seasonal refinery maintenance. The narrow discount of US WTI to North Sea Brent and lower domestic production are meanwhile luring more Nigerian cargoes into North America and supporting differentials.