- Saudi deepening output cuts, weaker DXY and Venezuelan crisis drive oil higher.
- All eyes on API crude stockpiles report for fresh trading direction.
The bulls regained poise in the European session and drove WTI (oil futures on NYMEX) to hit fresh weekly tops at 57.45, as Brexit optimism lifted the appetite for the risk assets such as oil. Moreover, increased expectations of tightening oil markets also added to the bullish tone in oil prices, as OPEC’s de facto leader Saudi Arabia looks set to deepen the cartel’s supply cuts.
On Monday, a Saudi Arabian Government official noted that the Kingdom is planning to extend deeper-than-agreed oil cuts into April to below 7 million barrels per day (bpd), while keeping its output “well below” 10 million bpd.
In addition, a broadly weaker US dollar amid risk-on trades and the recent bullish US drilling sector activity report also continues to offer support to the bulls. Further, supply disruption risks, in the wake of the political and economic crisis in OPEC-member Venezuela, remains a key catalyst for the recent upsurge in the barrel of WTI.
Looking ahead, markets eagerly await the weekly US crude supplies report due to be published by the American Petroleum Institute (API) at 2130 GMT for fresh trading impetus.