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In a notable shift of market sentiment, traders are ramping up their purchases of crude oil, reflecting newfound confidence in OPEC+'s resolve to maintain supply constraints. Analysts report that this surge in buying activity is the most pronounced since 2020, signaling a significant response to recent developments in the oil market.
According to market analyst John Kemp, traders have accelerated their oil purchases, driven by a combination of factors including OPEC+'s steadfast commitment to limiting supply. This commitment has been underscored by recent actions and statements from the organization, instilling greater trust among traders in their efforts to balance the market.
However, OPEC's efforts are not the sole catalyst behind the surge in oil purchases. Refinery disruptions in Russia caused by Ukrainian drone attacks have also played a crucial role in bolstering bullishness in oil markets. Reports suggesting that the U.S. urged Ukraine to cease targeting Russian refineries, coupled with Ukraine's refusal to comply, have further heightened market tensions and spurred buying activity.
Moreover, analysts are revising their outlooks for the global economy, painting a more optimistic picture compared to last year's uncertainties. Recent upward revisions in economic forecasts by institutions such as the International Monetary Fund and S&P Global Market Intelligence have instilled confidence in oil demand projections, prompting traders to once again buy oil in significant volumes.
According to data from Reuters for the week ending March 19, traders collectively purchased the equivalent of 140 million barrels across the six most traded crude and fuel contracts. Notably, crude oil saw the highest buying activity, with West Texas Intermediate and Brent crude accounting for 57 million barrels and 55 million barrels, respectively, during that week.
As traders respond to evolving dynamics in the oil market, all eyes remain on OPEC+ and geopolitical developments, which continue to shape the trajectory of oil prices and market sentiment.