Oil extends gains on OPEC+ supply restraint

By Sonali Paul
MELBOURNE, March 5 (Reuters) - Oil prices rose early on
Friday, adding to big gains overnight after OPEC and its allies
agreed to not increase supply in April as they await a more
solid recovery in demand from the coronavirus pandemic.
U.S. West Texas Intermediate (WTI) crude CLc1 futures
climbed 17 cents, or 0.3%, to $64.00 at 0128 GMT, holding below
a 13-month high hit on Thursday.
Brent crude LCOc1 rose 10 cents, or 0.2%, to $66.84 a
barrel, but down from a high of $67.75 hit on Thursday.
Both contracts soared more than 4% on Thursday after the
Organization of the Petroleum Exporting Countries and allies,
together called OPEC+, extended oil output curbs into April,
with small exemptions to Russia and Kazakhstan. "It just goes to show how much of a surprise the OPEC+
discipline is," said Michael McCarthy, chief market strategist
at CMC Markets.
"What makes the gain even more impressive is that it comes
against a risk-off backdrop and a higher U.S. dollar," he said.
Oil prices usually fall when the dollar rises as a higher
greenback makes oil more expensive for buyers with other
currencies.
Investors were surprised that Saudi Arabia had decided to
maintain its voluntary cut of 1 million barrels per day through
April even after oil prices rallied over the past two months.
"The group's supply discipline shows that Saudi Arabia's
preference for caution is being adhered to," Commonwealth Bank
commodities analyst Vivek Dhar 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 in order to boost
returns to investors.
"Oil prices could rip higher now that a tight market is
likely up through the summer. WTI crude at $75 no longer seems
outlandish and Brent could easily top $80 by the summer," OANDA
analyst Edward Moya said in a note.