A positive week for oil… The two crudes are at their highest levels 2021-02-15T11:03:42 A positive week for oil… The two crudes are at their highest levels in nearly 2 years A positive week for oil… The two crudes are at their highest levels in nearly 2 years: Although the price hike stumbled on Thursday, oil prices closed the week at their highest levels in more than two years on Friday, as West Texas Intermediate oil futures for March delivery reached $ 59.47 a barrel, rising by 2.11% compared to the previous day. This week Brent oil prices closed at $ 62.43 a barrel, rising at a rate of 2.11% daily. According to Bloomberg data, Brent is at its highest level since October 2019. At the same time, the price of WTI crude oil is at its highest level since November 2018. Last week, crude prices rose by 4.60%. Brent oil futures for April delivery rose at a range of 5.21%. Why did oil rise? Oil prices rose due to hopes that US stimulus will support the economy and fuel demand for oil. In addition, oil supplies have been shrunk due to production reduction by the largest producers in OPEC+, which by its turn supported oil as well. US President, Joe Biden will meet a group of mayors and governors from both parties as he continues to push for approval of a $ 1.9 trillion aid plan to combat Coronavirus, support economic growth, and help millions of unemployed workers. According to Reuters, Jim Ritterbusch, president of Ritterbusch and his partners in Galena, Illinois, said, “expected US incentives and continued in the vaccine will likely maintain the appetite for risky assets in providing support to oil market”. Oil prices have increased during the last few weeks. This partly due to production reduction by OPEC+. In a note, Capital Economics analysts said: “Oil prices halted their recent gains this week, supported by more indications of decreasing crude stocks, especially in the United States of America. Capital Economics said: “We expect supplies to further decrease later this year as demand for transportation fuels will increase in line with the easing of restrictions relating to Coronavirus on travel after progress in vaccination process”. OPEC has the biggest credit In spite of all previous reasons, the price of oil significantly increased during last month thanks to the January meeting of OPEC and its allies. At that meeting, Saudi Arabia suddenly undertook to voluntarily reduce its oil production by 1 million barrels a day during February and March. Saudi Arabia is expected to produce about 8.119 million barrels of oil a day during the two months. OPEC + production of oil for February is expected to be about 35.728 million barrels a day, compared to the production of October 2018. This means an oil reduction of 8.125 million barrels. During next March, reductions will reach about 8.050 million barrels of oil a day. After the January meeting of the OPEC + group, the price of oil immediately rose by more than 10%. After the outcome of negotiations, Goldman Sachs Bank revised its forecast for the development of oil prices. It expected that Brent oil price will reach about $ 65 a barrel during the middle of the year. The next meeting of the OPEC + group is supposed to be held on March 4. This program will determine oil reductions for the following month or months. However, This week OPEC lowered expectations for a recovery in global oil demand by 110,000 barrels a day to 5.79 million barrels a day in 2021. International energy is still cautious This week, International Energy Agency (IEA) said that there is still an oversupply in the global oil market due to in place measures to limit the spread of Covid-19 and its new strains. According to International Energy Agency, expectations of global economic growth and development of oil demand are closely related to the distribution of vaccines. This progress will be followed by easing travel restrictions on major economies of the world. IEA added that oil supplies are still exceeding global demand, although the Covid-19 vaccine is expected to support a recovery in demand. IEA noted that a rapid decline in oil reserves which is expected in the second half of this year may lead to an easing of oil declines by the OPEC + group. Last week, US oil inventories fell to 469 million barrels for the third week in a row. This is the lowest level since March of last year. For his part, Commerzbank said: “IEA report paints a more pessimistic picture than expectations of market participants because of current high prices”. Rebalancing of oil market may also face obstacles if US production rises. According to Baker Hughes data, This week, US drilling workers added oil and natural gas rigs for the twelfth week in a row. This is considered the longest addition since June 2017. The number of oil rigs that are considered indicators of the outlook for the US oil industry and short-term crude oil production rose by 7 this week. According to weekly data from Baker Hughes, oilfield services company, the number of drilling rigs in the United States increased by 7 to reach 306 during the week between 6 to 12 February compared to last week. The number of oil drilling rigs in the United States of America decreased by 370 last year. On the other side demand data from the world’s largest oil importer gives a bleak picture. The number of people who travel to China during the Chinese Lunar New Year holiday has decreased by 70% from the last 2 years.