Published: Wed, February 03, 2021
Economy | By

Oil rises most in weeks swept up in broader market enthusiasm

Oil rises most in weeks swept up in broader market enthusiasm

"Crude is being supported by many small factors this week - expected drawdowns in Cushing, a sudden rise in winter fuel demand amid colder weather, and further talks on Capitol Hill about stimulus checks", said John Kilduff, partner at Again Capital LLC in NY.

Voluntary cuts of 1 million barrels per day by OPEC's de facto leader, Saudi Arabia, are to be implemented from the beginning of February through March. On Wednesday, a panel that oversees OPEC's strategy - the Joint Ministerial Monitoring Committee - will convene online to assess the outlook.

Crude oil markets saw a spike into the close of Tuesday futures trade following a bullish weekly API inventory report; crude oil stocks saw a surprise drawdown of 4.3M barrels (expectations were for a modest 400K barrel build).

Worldwide benchmark Brent crude was trading at USD55.38 per barrel at 0654 GMT for a 0.65 percent increase after closing the past session at USD55.02 a barrel.


No changes in policy are expected from the group on Wednesday, "with OPEC+ having already agreed on output levels for the remainder of the first quarter earlier this year", said Warren Patterson, head of commodities strategy at ING, in a note. Crude has been climbing steadily since late previous year as coronavirus vaccines and producers' supply curbs boost expectations of a tighter market.

It, however, still faces bumpy short-term demand amid concern that new virus variants will lead to more lockdowns, while vaccine rollouts are slower than expected in some countries.

US 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.

On Tuesday, March gasoline tacked on 1.6% to $1.6160 a gallon and March heating oil added 1.7% to $1.6746 a gallon. Firstly, most analysts expect winter demand to be higher than usual in the U.S. amid one of the worst snowstorms to hit the North East region in years. The big East Coast storm and cold temperatures had provided a lift to prices, according to Colin Cieszynski, chief market strategist at SIA Wealth Management.

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