Oil futures surged by more than 8 percent to above $40 per barrel in April, as market sentiment turned more upbeat amid signs that a persistent global supply glut may be easing, OPEC said. It comes just a day after the International Energy Agency (IEA) said global oil markets were heading towards a long-awaited equilibrium.
OPEC left its 2016 world oil demand growth forecast unchanged at 1.20 million barrels per day.
All eyes are on the next move by OPEC when it meets on June 2. So far, it has shown no signs of backing down from its decision in November 2014 to produce at full-tilt in a bid to defend its market share against non-OPEC rivals, particularly shale oil producers in the U.S. Saudi Arabia’s state-run oil company Saudi Aramco indicated on Tuesday that that its production will trend slightly higher this year.
The country drew attention to itself last weekend when a cabinet reshuffle led to Saudi Oil Minister Ali-al-Naimi being replaced by Khalid al-Falih, the former president of Saudi Aramco. The new minister in charge of the Kingdom’s oil policy signaled no dramatic change in policy from the Saudis.
“Strong gasoline consumption in the United States, declining production around the world and oilfield outages underpinned a return to investment in the sector,” OPEC said in its monthly report on Friday.
“Not much has fundamentally changed as the oversupply remains and global oil inventories are at record highs. But investors hope strong demand, particularly for gasoline, ahead of the U.S. driving season and weaker non-OPEC production will help work down excess supply,” it added.
It noted an increase in speculative positions betting on higher prices which reinforced growing optimism that oil and other commodities are back in fashion with institutional investors after a year-long rout.
“By the end of April, money managers raised their bullish bets on crude oil futures and options to fresh ten-month highs, as prices rallied to their highest levels this year on hopes that stronger demand will help deplete record stocks,” OPEC said.
It added that speculator bets on higher Brent prices reached record highs in April, their largest monthly advance in seven years, according to exchange data from ICE (Intercontinental Exchange) to the end of April.