Oil futures turned higher on Thursday, with the U.S. benchmark eyeing another finish at a more than seven-year high, a day after the Organization of the Petroleum Exporting Countries and its allies stuck with a plan to boost production by another 400,000 barrels a day in March.
Oil prices had been trading lower before a mid-session turnaround.
West Texas Intermediate crude for March delivery CL00, +0.23% CL.1, +0.23% CLH22, +0.23% edged up by 35 cents, or 0.4%, to $88.61 a barrel on the New York Mercantile Exchange. It had eked out a small gain Wednesday for its highest finish since October 2014. April Brent crude BRN00, +0.23% BRNJ22, +0.23%, the global benchmark, was up 29 cents, or 0.3%, at $89.76 a barrel on ICE Futures Europe.
Trading in oil futures came as the European Central Bank acknowledged that inflation wasn’t transitory, suggesting a strong euro, which put pressure on the U.S. dollar DXY, -0.65%, said Phil Flynn, senior market analyst at The Price Futures Group. That contributed to the turn higher in dollar-denominated oil prices.
Meanwhile, The Wall Street Journal reported that the end is in sight for America’s fracking companies, with many of them having already tapped their best wells.
The story suggests that shale oil production could peak, helping to push oil prices back up on Thursday, said Flynn.
On Wednesday, a group of oil producers known as OPEC+ refused to be pressured into raising output faster in March or, perhaps, “were forced to do something they’re unable to do right now,” said Craig Erlam, senior market analyst at OANDA, in a note.
The group stood by previous commitments, “which leaves us to wonder just how much [oil] they will actually manage to deliver this time,” he said. “The steady approach didn’t generate any fresh optimism for crude, despite rumors beforehand that we could see a larger increase in March, amid political pressure.”
OPEC+ has failed to raise output in line with past monthly increases.
See: Why OPEC+ can’t hit its oil production targets — and what it could do about it
Also, several OPEC+ representatives appeared to tie the recent rise in prices to tensions between Russia, a member of the group, and Ukraine.
“Pumping more oil onto the market just now will do little to change this in our view,” said Carsten Fritsch, analyst at Commerzbank, in a note. “It is more important to be able to supply more oil to the market if need be. And for this to be possible sufficient spare capacities are vital. Yesterday’s decision by OPEC+ makes sense to us, in other words.”
In other energy trading on Nymex, March gasoline RBH22, +0.08% rose 0.2% to $2.612 a gallon, while March heating oil HOH22, +0.93% added 0.8% to $2.791 a gallon.
After a nearly 16% rise on Wednesday with winter storms expected to boost demand for the heating fuel, natural-gas futures fell back Thursday.
March natural gas NGH22, -10.43% traded at $4.857 per million British thermal units, down 11.7%.
Prices continued to trade lower after the Energy Information Administration reported that domestic natural-gas supplies fell by 268 billion cubic feet for the week ended Jan. 28.
That compared with the average decline of 274 billion cubic feet forecast by analysts polled by S&P Global Platts, which pegged the five-year average supply fall for the period at 150 billion cubic feet.
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