Oil holds near 13-month high, supported by sharp drop in US output

NEW YORK: Oil prices held near 13-month highs on Thursday, with profit-taking restricted by an assurance that US interest rates will keep low and a sharp drop in US crude output final week because of the winter storm in Texas.

Brent futures for April supply rose 10 cents, or 0.2%, to $67.14 a barrel by 11:36 a.m. EST (1636 GMT), whereas US West Texas Intermediate (WTI) crude rose 44 cents, or 0.7%, to $63.66. The April Brent contract expires on Friday.

In intraday commerce, each contracts hit their highest since January 2020 and each are on monitor for his or her highest settlement in 13 months.

“Oil prices are edging higher today but once again there does appear to be flagging momentum in the rally, perhaps a sign that we’re heading for a correction in the incredible four month bull run,” stated Craig Erlam, senior analyst at OANDA.

Analysts famous increased oil costs in current weeks – each Brent and WTI have been up about 20% in February – may encourage US producers to return to the wellpad and OPEC+ to loosen its manufacturing reductions.

The Organization of the Petroleum Exporting Countries and its allies together with Russia, a gaggle referred to as OPEC+, are resulting from meet on March 4.

The group will talk about a modest easing of oil provide curbs from April given a restoration in costs, OPEC+ sources stated, though some counsel holding regular for now given the chance of latest setbacks in the battle towards the pandemic.

Extra voluntary cuts by Saudi Arabia in February and March have tightened international provides and supported costs.

Meanwhile, an assurance from the US Federal Reserve that rates of interest would keep low for some time ought to enhance traders’ threat urge for food and international fairness markets, whereas weakening the US greenback to its lowest in seven weeks towards a basket of different currencies.

The winter storm in Texas brought about US crude manufacturing to drop by greater than 10% or 1 million barrels per day (bpd) final week, the Energy Information Administration (EIA) stated.

Fuel provides in the world’s largest oil shopper additionally tightened as its refinery crude inputs dropped to the bottom since September 2008, EIA information confirmed.

Texas state legislators on Thursday began digging into the causes of lethal energy blackouts that left thousands and thousands shivering in the darkish as frigid temperatures caught its grid operator and utilities ill-prepared for skyrocketing energy demand.

ING analysts stated US crude stockpiles may rise in weeks forward as manufacturing has recovered pretty shortly whereas refinery capability is anticipated to take longer to return to regular.

Barclays, which raised its oil worth forecasts on Thursday, stated oil may rally once more on the weaker-than-expected provide response by US oil operators to increased costs.

“However, we remain cautious over the near term on easing OPEC+ support, risks from more transmissible COVID-19 variants and elevated positioning,” Barclays stated.

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