Oil closes higher, with dollar falling, tensions around Ukraine and OPEC+

After a volatile session, oil futures contracts reversed losses from the beginning of the day and closed higher on Thursday (3).

The commodity benefited from the fall in the dollar, pressured by the euro and the pound, which gained strength after decisions by the Bank of England (BoE) and European Central Bank (ECB).

In addition, investors are still monitoring the geopolitical crisis in Ukraine and the supply of oil by the Organization of Petroleum Exporting Countries and allies (OPEC+).

On the New York Mercantile Exchange (Nymex), the barrel of WTI oil for March rose 2.28% (US$ 2.01), to US$ 90.27, while Brent oil for April advanced 1.83% (US$ 1.64), on the Intercontinental Exchange (ICE), at $91.11.

Crude oil started Thursday’s session on a decline after Iran’s oil minister reiterated on Wednesday that the country “is ready to expand its supply to the market as soon as possible”.

For Rystad Energy, however, doubts persist over OPEC+’s ability to maintain full production capacity and supply prospects remain tight.

“Hope that OPEC+ crude production can bring balance to the market seems weak and traders are bracing for more volatility. There is an upside risk as supply remains tight globally, but downward price pressure may be evident in the short term as geopolitical tensions may ease.

Rystad also points out that the Ukraine issue took a back seat, indicating that the chances of the world’s biggest energy powers, in terms of fossil fuel production, being able to avoid military action have increased.

“Overall, the market remains bullish on oil prices. The prevailing expectation is that the market, despite some bearish swings caused by pandemic demand scares, will continue to trade higher in oil, as there is a real shortage of supply both in the short and long term”, he ponders.