DTN Oil

WASHINGTON (DTN) -- In opening trade on the first day of April, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange advanced on bullish economic data out of the European Union showing manufacturing activity grew at an accelerated pace at the end of the first quarter despite Germany and France enacting new lockdown measures, while the market also anticipates the Organization of the Petroleum Exporting Countries and Russia-led partners will likely decide to extend ongoing production cuts for at least another month at their meeting Thursday.

German manufacturers reported the highest growth on record in March, benefited by a synchronized upturn in new export orders to the United States and China, according to the survey conducted by IHS Market. Germany -- an export-oriented economy, managed to insulate its industrial sector for months now from the adverse effect of coronavirus led lockdowns that have shuttered services and small retailers since early December 2020.

In France, goods producing industries also saw the steepest rise in new orders last month since at least September 2000, giving further indication that demand conditions are improving ahead of the anticipated reopening of the global economy later this year. French and German Purchasing Manager's Indices exceeded market expectations in March, clocking in 59.3 and 66.6, respectively, in the final weeks of the first quarter.

The upswing in manufacturing data came despite renewed lockdown measures in much of the continental Europe, with France enacting a third round of business shutdowns on Tuesday and Italy extending its quarantine measures until the end of April. This follows a steady rise in new infections despite targeted lockdowns remaining in place since at least early March.

Due to the latest developments, markets mostly expect OPEC+ to maintain 7.05 million barrels per day (bpd) in production cuts for at least another month, with Saudi Arabia also seen keeping its 1 million bpd unilateral cut when the ministers convene later today via videoconference.

At OPEC+'s last meeting in March, Saudi Arabian energy minister Prince Abdulaziz said Saudi Arabia plans to "gradually phase in" extra barrels, insisting it would depend on market conditions.

"We will see what the market requires," the prince said at OPEC+'s March 4 meeting. "We are not required to bring it back fast or furious. We will bring it back at our convenience."

Domestically, high-frequency data continues to suggest the economy's ongoing recovery, with unemployment claims falling to the lowest level since the beginning of the pandemic and traffic activity climbing to pre-pandemic levels. U.S. private sector employment increased by 517,000 in March, with notable improvement registered by service-oriented small businesses. Wednesday's inventory report reflected these improvements, showing gasoline demand surging to a fresh six-month high 8.9 million bpd last week, while refinery activity sped up to a one-year high 83.9% utilization rate.

Further bolstering sentiment, President Joe Biden outlined on Wednesday a $2.25 trillion infrastructure-spending plan that is seen benefiting a wide variety of industries and commodities. The proposal includes a doubling of federal funding for public transportation, $650 billion for clean water and high-speed broadband, more than $500 billion in spending on manufacturing, including $180 billion for non-defense research and development. Speaking in Pittsburgh, Biden said the proposal is a "once in a generation investment in America."

In early trading, May West Texas Intermediate futures added 26 cents to trade near $59.43 per barrel (bbl) and the June Brent contract on ICE gained 23 cents to trade just below $63 bbl. NYMEX May ULSD futures advanced 1.22 cents to $1.7820 gallon and NYMEX RBOB May futures traded near $1.9693 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com