Futures Movers: Oil on track for third straight weekly gain after OPEC+ production cuts

Price action

• West Texas Intermediate crude for May delivery
  CL00,
  +0.10%

  CL.1,
  +0.10%

  CLK23,
  +0.10%
  fell 2 cents, or less than 0.1%, to $80.59 a barrel on the New York Mercantile Exchange, putting the U.S. benchmark on track for a 6.5% weekly rise.

• June Brent crude
  BRN00,
  +0.18%

  BRNM23,
  +0.18%,
  the global benchmark, was unchanged at $84.99 a barrel, headed for a 6.4% gain for the week.

• Back on Nymex, May gasoline
  RBK23,
  +0.20%
  was flat at $2.821 a gallon, while May heating oil
  HOK23,
  -0.53%
  edged down 0.3% to $2.722 a gallon.

• May natural gas
  NGK23,
  -0.88%
  roe 0.6% to $2.169 per million British thermal units.

Market drivers

Crude prices are holding on to gains scored after Saudi Arabia and a handful of other producers last weekend announced cuts that would collectively take around 1.15 million barrels a day of production off the market beginning in May and running through year-end. Also, Russia said it would extend a cut of 500,000 barrels a day through the end of the year. OPEC+ is made up of the Organization of the Petroleum Exporting Countries and its allies, including Russia.

See: 6 things investors need to know about the surprise OPEC+ production cuts

Several Wall Street banks have raised oil-price forecasts, though analysts warned that the production cuts could also signal concerns about demand for crude as worries persist about interest rate rises by the Federal Reserve and other major central banks.

“Bottom line, the fundamental dynamics of the oil market changed this week with OPEC+’s announced production cut, which they said was geared towards regaining control of the markets and spooking speculators out of the market,” said analysts at Sevens Report Research, in a Thursday note.

“But it is also possible that OPEC+ foresees a drop in demand amid recessionary pressures and if that turns out to be the case, it will likely be the first of multiple output cuts as global demand would fall sharply in a recession and oil prices would almost certainly follow suit, depending, of course, on the reaction by global producers to easing demand,” they wrote.