Oil prices hit their highs in many months on Monday amid hopes that the Organisation of the Petroleum Exporting Countries (OPEC) and allies will limit supply at present levels next month.
Brent crude futures appreciated to $53.17 per barrel, its peak since last March. U.S. West Texas Intermediate crude advanced to $49.71 per barrel, representing also its highest since February 2020.
Brent crude futures for March traded at $52.94 a barrel at 08:36 West Africa Time, gaining $1.14 or 2.2% while WTI crude futures for February swelled by 98 cents or 2% to $49.50.
Virendra Chauhan, analyst at Energy Aspects, said factors such as a feebler dollar and the positioning of investors for an oil industry rebound in 2021 might fortify oil prices.
“Maybe there is some positive sentiment from OPEC+ looking to constrain supply in light of the virus rearing its ugly head in the west,” he stated.
OPEC’s Secretary General Mohammed Barkindo disclosed on Sunday that much as oil demand was projected to expand by 5.9 million barrels per day (bpd) to 95.9 million bpd this year, OPEC anticipated a lot of downside demand risks from January to June, creating uncertainties around considerable oil price recovery.
“We are only beginning to emerge from a year of deep investment cuts, huge job losses and the worst crude oil demand destruction on record,” Barkindo said.
Oil prices finished 2020 at around one fifth lower than the average prices of the year before as they struggled to rally from the effects of lockdown curbs the world over, a development that has tapered fuel demand although major oil producers consented to cut output.
OPEC and its Russia-led allies, a cartel known as OPEC+, resolved in December to ramp up supply by half a million barrels per day from this month with an expectation of higher demand, which might strengthen oil prices, and planned to meet monthly for supply review.
Pundits at Energy Aspects and RBC Capital foresaw that OPEC could replicate the levels of production for January in February.
“We think the producer group will opt to forgo any further production increases for February with COVID-19 cases continuing to climb and the slower-than-expected vaccine rollout,” RBC Capital’s Helima Croft said.
Production in the U.S fell due to low oil prices and subdued demand, with over 2 million bpd decline reported in October 2020 relative to the figure recorded in the same period of 2019, according to a 1st January government report.
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