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.
US West Texas Intermediate (WTI) crude futures climbed 17 cents, or 0.3 per cent, to $64.00 at 0128 GMT, holding below a 13-month high hit on Thursday.
Brent crude rose 10 cents, or 0.2 per cent, to $66.84 a barrel, but down from a high of $67.75 hit on Thursday.
Both contracts soared more than 4 per cent on Thursday after the Organisation 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 US 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 US 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.