SINGAPORE: Oil prices rose on Friday following a decision by Opec+ to keep its oil output policy unchanged, although benchmarks were headed for weekly losses amid unsubstantiated reports of a ceasefire between Israel and Hamas.

Brent crude futures climbed 44 cents, or 0.6 per cent, to $79.14 a barrel by 0730 GMT, while US West Texas Intermediate crude futures gained 36 cents, or 0.5pc, to $74.18 a barrel.

On Thursday, two Opec+ sources said the group has kept its oil output policy unchanged, and will decide in March whether or not to extend the voluntary oil production cuts in place for the first quarter.

The Organisation of the Petroleum Exporting Countries (Opec) and allies led by Russia, known as Opec+, has output cuts of 2.2 million barrels per day (mbpd) in place for the first quarter, as announced in November.

ANZ Research analysts said in a Friday note those production cuts should keep supply tight in the first quarter, with non-Opec production increases set to normalise and US output growth slowing in 2024 to 300,000 bpd from 800,000 bpd last year.

Also supporting oil prices were the US Federal Reserve’s decision to keep the benchmark overnight interest rate in the 5.25pc-5.50pc range and comments by Chair Jerome Powell, who said interest rates had peaked and would move lower in coming months.

Lower interest rates would reduce consumer borrowing costs, which can boost economic growth and oil demand.

However, oil prices were headed for weekly losses of about 5pc, as unsubstantiated reports of a ceasefire between Israel and Hamas capped gains and caused the contracts to settle more than 2pc lower on Thursday.

Published in Dawn, February 3rd, 2024