FX.co ★ Oil price outlook

Oil prices have been rising for the fourth consecutive week following OPEC's announcement of a supply cut.

The latest report showed OPEC's average daily output at 28.8 million barrels for March, which was 86,000 barrels per day less than the average for February.

OPEC also said in its report that, the oil market would face a substantial supply deficit by the end of the year that would only worsen over time. International Energy Agency (IEA) head Fatih Birol also warned of a tighter oil market in the second half of the year, further contributing to higher prices.

An additional bullish factor for prices came from Russia. Some analysts believe there are signs of lower production. According to Reuters, exports from Russia are decreasing as production is reported to have been curtailed by 700,000 barrels per day.

If the IEA reports a revised demand outlook and the revision is downward, this could temporarily limit a bullish run in oil prices. On the other hand, the latest oil import data from China showed a 22.5% annual increase for March, suggesting that even if there were still signs of an economic downturn, it was not in China when it came to oil demand.

Another factor contributing to higher oil prices is the dollar which has been sliding for the fifth week in a row.

This in turn boosts the attractiveness of crude oil as the commodity is overwhelmingly traded in dollars. A decline in the greenback reflects expectations that the Fed could soon announce the end of its rate-hike program, although inflation is still above the target level set by the central bank.