Oil extends gains after surprise Saudi output cut

News

Oil prices extended gains on Wednesday, rising to their highest since late February, after Saudi Arabia announced a big voluntary production cut, and as an industry report showed U.S. inventories fell last week.

Brent crude rose 85 cents, or 1.6%, to $54.45 a barrel at 1050 GMT, its highest level since Feb. 26, 2020, after jumping about 5% on Tuesday.

U.S. West Texas Intermediate (WTI) futures were up 52 cents, or 1%, to $50.45 a barrel, also their highest since Feb. 26. The contract on Tuesday closed up 4.6%.

Saudi Arabia, the world’s biggest oil exporter, on Tuesday announced it would make additional, voluntary oil output cuts of 1 million barrels per day (bpd) in February and March, after a meeting of OPEC+, which groups Organization of the Petroleum Exporting Countries producers and others, including Russia. [nL1N2JG0GX]

With coronavirus infections spreading rapidly producers are wary of a further hit to demand.

OPEC+ agreed most producers would hold output steady in February and March while allowing Russia and Kazakhstan to raise output by a modest 75,000 bpd in February and a further 75,000 bpd in March.

“Despite this bullish supply agreement, we believe Saudi’s decision likely reflects signs of weakening demand as lockdowns return,” Goldman Sachs analysts wrote in a note, though they maintained an end-2021 forecast for Brent of $65 a barrel.

U.S. crude oil inventories fell by 1.7 million barrels in the week to Jan. 1 to 491.3 million barrels, data from industry group the American Petroleum Institute showed late on Tuesday. [EIA/S] [API/S]

Official U.S. Energy Information Administration inventory data for the week to Jan.1 is due on Wednesday.

Articles You May Like

Gold price steady amidst rumors on trump mulling universal tariffs
Gold Price Today: Gold prices trade flat in this week so far, silver up by Rs 1,600/kg
Eurozone November retail sales +0.1% vs +0.4% m/m expected
Where new jobs were in 2024, and potential growth areas in a second Trump term
EUR/USD Price Analysis: Pair in multi-year lows, sellers advance

Leave a Reply

Your email address will not be published. Required fields are marked *