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Oil hits highest in a year on growth hopes, OPEC+ cuts

CommoditiesFeb 05, 2021 07:15AM ET
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© Reuters. FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland

By Alex Lawler

LONDON (Reuters) - Oil hit its highest level in a year on Friday, closing in on $60 a barrel on economic revival hopes and supply curbs by producer group OPEC and its allies.

New orders for U.S.-made goods rose more than expected in December, pointing to continued strength in manufacturing. The U.S. Congress is also moving ahead on President Joe Biden's COVID-19 relief plan.

Brent crude was up 63 cents, or 1.1%, at $59.47 by 1200 GMT after hitting its highest since Feb. 20 last year at $59.75. U.S. crude was up 54 cents, or 1%, at $56.77, after reaching $57.09, its highest since Jan. 22 last year.

"The conditions still remain supportive for oil markets," said Jeffrey Halley, analyst at brokerage OANDA. "Oil should find plenty of willing buyers on any material dip."

Brent is on track to rise more than 6% this week. The last time it traded at $60, the pandemic had yet to take hold, economies were open and people were free to travel, meaning demand for gasoline, diesel and jet fuel was much higher.

The rollout of COVID-19 vaccines, however, is fuelling hopes of lockdowns being eased, boosting fuel demand. But even demand optimists such as OPEC do not expect oil consumption to return to pre-pandemic levels until 2022.

Oil also gained support from supply curbs by producers. OPEC and its allies, collectively known as OPEC+, stuck to their supply tightening policy at a meeting on Wednesday. Record OPEC+ cuts have helped to lift prices from historic lows last year.

"OPEC+ discipline has been a real positive," said Michael McCarthy, chief market strategist at CMC Markets.

Further boosting the market, a weekly supply report showed a drop in U.S. crude inventories to their lowest since March, suggesting that output cuts by OPEC+ producers are having the desired effect.

Oil hits highest in a year on growth hopes, OPEC+ cuts
 

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Comments (5)
Alan Rice
Alan Rice Feb 07, 2021 1:37PM ET
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Proper 2021 WTI valuation: $120+/bbl.
Shane Sackel
Shane Sackel Feb 05, 2021 3:30PM ET
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They lay off all those pipeline workers so we can pay more for gas. Don’t worry the Dems. got this handled just make the worker pay more for everything and keep handing checks out to people that don’t want to work.
Vlad Lozovskiy
Vlad Lozovskiy Feb 05, 2021 9:33AM ET
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They try to bring it to us as a good news.  In reality this means we pay more for goods and services, and at the pump. Thanks Joe!!!
Nirav Pathak
Nirav Pathak Feb 05, 2021 1:09AM ET
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2022 100$
Edward Chong
Edward Chong Feb 05, 2021 1:09AM ET
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Haha its good to have dreams.
Lucky Saigonese
Lucky Saigonese Feb 05, 2021 1:09AM ET
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Anyone bought oil stocks yet
George Undertaker
Thinktwice Feb 05, 2021 1:09AM ET
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Lucky Saigonese  Xom, in late nov (after the first rallye to recovery) 2020. Doing well.
Gene Kret
Gene Kret Feb 05, 2021 1:09AM ET
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UCO every single day.... in and out in and out. Airplanes need oil, ships need oil, petrochemical companies and plastics all need the black stuff.
Benjamin Scheinson
Benjamin Scheinson Feb 05, 2021 12:43AM ET
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And we were just self sufficient
 
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