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Oil rises to $69 as focus returns to tighter market

Published 03/08/2021, 08:59 PM
Updated 03/09/2021, 07:20 AM
© Reuters. Views of Total Grandpuits oil refinery

By Alex Lawler

LONDON (Reuters) - Oil rose to $69 a barrel on Tuesday as investors focused on prospects for tighter supply due to extended OPEC+ output curbs and amid growing hopes of a recovery in demand.

Crude hit its highest since the start of the pandemic on Monday after Yemen's Houthi forces fired drones and missiles at Saudi oil sites on Sunday. Saudi Arabia said it thwarted the strike and prices slipped as supply fears eased.

Brent crude was up 89 cents, or 1.3%, at $69.13 by 1200 GMT, after trading as low as $67.61. It reached to $71.38 on Monday, its highest since Jan. 8, 2020.

U.S. West Texas Intermediate (WTI) added 82 cents to $65.87, after hitting its highest since October 2018 on Monday.

"Dips have been lately viewed as buying opportunities," said Tamas Varga of broker PVM. "Last week's OPEC+ meeting will ensure that the global oil balance will get tighter in the foreseeable future."

The Organization of the Petroleum Exporting Countries (OPEC), Russia and allies, known as OPEC+, decided on Thursday to broadly stick to output cuts, fuelling a rally.

"With a structural undersupply in the physical market now, any dips in oil prices are likely to attract physical buyers' attention," said Jeffrey Halley of broker OANDA.

Prices also rose on expectations of economic recovery after the U.S. Senate approved a $1.9 trillion stimulus package, outweighing a stronger U.S. dollar, which tends to crimp investor demand for commodities.

U.S. Treasury Secretary Janet Yellen said on Monday the aid package would provide enough resources to fuel a "very strong" U.S. economic recovery. The U.S. House of Representatives must still approve it.

© Reuters. Views of Total Grandpuits oil refinery

In another development that would support prices, U.S. crude stockpiles are expected to drop. The first of this week's reports, from the American Petroleum Institute, is out at 2130 GMT. [EIA/S]

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