Crude oil prices are about to record their fourth consecutive week of gains after OPEC said in its monthly report that supply is about to tighten further.
The latest Monthly Oil Market Report showed OPEC’s combined daily average output at 28.8 million barrels for March, which was 86,000 bpd less than the average for February.
Yet OPEC also said in its latest report that the oil market was in for a substantial supply deficit later in the year that would only worsen with time.
Further contributing to higher prices, the head of the International Energy Agency, Fatih Birol also warned of a tighter oil market in the second half of the year.
Traders are anticipating the IEA’s own monthly oil market update, due out later today.
An additional bullish factor for prices came from Russia, where there are signs of lower production, according to analysts.
"Russian exports are showing signs of weakening as production is reported to have been curtailed by 700,000 barrels per day (bpd)," ANZ analysts said in a note, quoted by Reuters.
According to the news agency, if the IEA reports a revised demand outlook and the revision is downward, this could put a lid on oil prices for a while.
On the other hand, the latest oil import data from China showed a 22.5-percent annual increase for March, suggesting that even if there were still signs of an economic slowdown it was not in China when oil demand was concerned.
On top of all this, the dollar has been sliding for five weeks now, boosting the attractiveness of crude oil since the commodity is overwhelmingly traded in the greenback.
The slide itself reflects expectations that the Fed could soon announce the end of its rate hike program, even though inflation remains above the central bank’s target.