Published: Tue, February 02, 2021
Economy | By

Upside Momentum Could Carry Market to $57.41 Over Short-Run

Upside Momentum Could Carry Market to $57.41 Over Short-Run

Crude oil prices rose on Monday, against a backdrop of broadly favorable sentiment toward risk assets, at the start of a week that will see the Organization of Petroleum Exporting Countries and its allies hold their regular monthly review of the world market.

The price of WTI crude oil futures are settling at $53.55.

Crude oil delivery for February gained Rs 84, or 2.15 percent, to Rs 3,989 per barrel at 15:41 hours IST with a business turnover of 5,514 lots.

Iraq's crude oil exports, meanwhile, were almost unchanged in January, meaning the nation may have failed to meet its pledge to cut overall output to the lowest level in six years. "We see a rising call on OPEC for the second half of 2021, but we believe oil prices will be weighed down by the return of Iranian and United States oil", said Shin Kim, Head of Supply and Production Analytics, S&P Global Platts.

West Texas Intermediate crude was up 1.83 percent to $54.53 per barrel, while Brent crude, the London-based worldwide benchmark, rose 1.79 percent to $57.34 per barrel.

For most of 2021, oil prices are anticipated to remain around current levels before Covid-19 recovery advances towards year-end, according to a recent poll by Reuters.

"OPEC is continuing to implement the agreed production cuts in a disciplined manner. which is one of the main reasons why oil prices are so stable", said Commerzbank analyst Carsten Fritsch.

OPEC crude production rose for a seventh month in January but the increase was smaller than expected, a Reuters survey found.

Meanwhile, oil and gas drillers in the USA are gearing up for demand pickup as higher crude oil prices would make news wells profitable.

USA production data from the Energy Information Administration showed output rose above 11 million bpd in November, the first time it has exceeded that figure since April.

Oil rose past US$54 a barrel with help from a weakening dollar after jumping the most in three weeks on optimism over the demand outlook. Still, with cold weather sweeping across the US and much of Wall Street anticipating inventory draws in the coming months, prices continue to surge higher.

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