positive week for oil… It reaches its highest levels in a year
Positive week for oil… It reaches its highest levels in a year
Positive week for oil It reaches its highest levels in a year: A series of positive data from the US Energy Administration,
Organization of Petroleum Exporting Countries and its allies OPEC+ helped in supporting oil prices last week,
to close on a strong positive week in which prices reached their highest levels in more than a year.
Global oil prices started their trading week
Global oil prices started their trading week from February 1 to 5 through a downward trend as consumption in the market was
negatively affected by CORONA VIRUS “COVID-19” epidemic, so the supply of oil is likely to be increased.
The price of US West Texas Intermediate crude oil was at $ 51.76 a barrel on the first of February.
In the meantime, Brent oil was at $ 54.76 a barrel.
However, at the beginning of the second session of the week,
a series of positive data for supply and demand started to support and push prices higher.
Starting from the morning of February 2, West Texas Intermediate light crude futures for April 2021
delivery was approximately $ 53.38 a barrel by an increase of $ 1.62 a barrel compared to February 1.
Meanwhile, the price of Brent oil which will be delivered in April 2021 stabilized
at $ 56.28 a barrel after rising by $ 1.52 a barrel compared to February 1.
On February 2, oil prices sharply rose in the context of betting on the possibility of improving demand for fuel consumption,
including crude oil, especially as countries are suffering from Coronavirus have begun to intensify vaccination operations.
Recently published data indicates that an increasing number of Covid-19 vaccines proved their successful results.
The number Of Covid-19 infected cases has also shown a slight decrease in several places.
All over the week, West Texas Intermediate crude oil prices rose about 9%,
which is considered the largest range of increase since October of last year while Brent crude oil prices rose by 5% during the week.
This is partly due to last week’s decline in US oil inventories to levels lately seen in March.
On Friday, Crude oil prices rose by about 1% after reaching their highest level in a year, approaching $ 60 a barrel for Brent crude.
Investors are optimistic of being Saudi Arabia has entered a stage of fulfilling its commitment to decreasing an additional 1 million barrels a day.
Global oil prices were also driven by a downturn in stock markets as well as confidence in implementing OPEC+ commitments to reduce production.
Oil prices also found support as the US stock market reached record highs amid indications of progress towards
the further economic stimulus, while US employment reports also confirmed the stability of the labor market.
According to a Reuters survey, OPEC+ crude oil production rose during January 2021
for the seventh month in a row but this increase was less than expected.
OPEC continues to reduce its production
After the meeting of February 3, as it was planned,
OPEC+ continued to decrease production by about 7.15 million
barrels a day in February 2021 and by 7.05 million barrels a day during March 2021.
In addition, Saudi Arabia has voluntarily committed to reducing 1 million barrels a day in February and March 2021 so as to keep the market in balance.
Cold weather in the United States is also expected to boost heating oil consumption.
Meanwhile, according to American Petroleum Institute, US oil,
and fuel inventories for this week will be lower than expected.
This by its turn will push fuel imports to replace United State’s stocks
especially at a time when the US is currently witnessing cold weather.
According to US Energy Information Administration, crude oil inventories in the county retreated by 994 thousand barrels,
in stark contrast to Reuters experts’ expectations for an increase of 446 thousand barrels.
A subsidiary of Libyan National Corporation, Waha Oil (WOC) announced the closure of a crude oil pipeline at Libya’s largest oil export in Sidr.
This led to an estimated loss of approximately 200,000 barrels in production a day.
Optimism regarding the stimulus package
New us stimulus and economic support package used to be deadlocked.
This will take a long time before it is implemented.
Now, there are signs of optimism.
Specifically, US Senate which is controlled by Democratic Party
has voted to start the budget revision process which allows President Joe Biden’s
administration to publish a $ 1.9 trillion economic stimulus package.
At the end of the trading week, this positive information supported oil, as the price of West Texas Intermediate crude
recorded $ 56.92 a barrel, while the price of Brent oil crude reached $ 59.59 a barrel.
This week’s expectations
During a trading week from 8 to 12, analysts said that global oil prices will continue to gain strong support through
a series of positive data and are likely to continue to rise surpassing the highest level in more than a year.
Now, Brent crude is looking forward to a level of $ 60 a barrel after OPEC+ has managed to alleviate
most supply-side concerns in addition to increasing numbers of Covid-19 infections.
At the last time, Brent crude was traded at a rate of $ 60 a barrel, the pandemic was not present besides economy is still strengthening with the rising demand for oil.
The launch of vaccines helped in giving hopes for an increase in oil demand,
but even in case of optimism after decisions taken by OPEC+ regarding compensation for the decline
in oil demand, this year in a particular reduce production levels,
but expectations indicate that oil consumption will not return to pre-pandemic levels till 2022.
The highest records of OPEC+ declines helped in lifting prices from their historic lows last year.