Oil prices near $60 a barrel, OPEC+ stays resolute on supply cuts

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Crude oil prices rallied to their highest level in more than two weeks, as expectations strengthened on energy demand picking up globally.

At the time of writing this report, the British based oil contract, Brent crude, rallied by 0.78% to trade at $56.77 a barrel, while West Texas Intermediate futures gained 0.80% to trade at $53.98 a barrel.

The world’s leading oil giant, Saudi Aramco, has predicted that energy demand will return to pre-COVID-19 levels later in 2021, adding that it is confident the worst of the COVID-19 pandemic is now in sight.

READ: Crude oil prices high on Saudi’s pledge

What you must know: Saudi Aramco is the national energy company of Saudi Arabia and the most valuable energy company. It produces five grades of crude oil and natural gas liquids.

  • It also produces refined energy products that include liquefied petroleum gas, ethanol, naphtha, and other products.
  • It exports about 75% of its crude oil to foreign markets, most often with its oil tankers. Saudi Aramco has access to crude oil reserves of about 260 billion barrels, the largest in the world.

READ: UN tasks developed countries to fulfil $100 billion pledge for climate change

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on key drivers that gave oil prices the needed boost to stay relatively higher:

“And with the JMMC unlikely to signal any need to rock the boat, price planks are all in place with the street awaiting word on the US stimulus deal for the next bullish impulse.

“With the week dominated on the supply headline front with JMMC on tap, OPEC+ didn’t disappoint as the production group’s compliance level turned more than a few oil traders’ heads on a swivel overnight.

“Oil rallied as OPEC+ production compliance, ringing in at 99 % helped lift prices even in the face of a stronger US dollar. Demand in the physical market has been the driver of a strong front of the curve.”

READ: Presidency questions how many Nigerians have cars, generators, defends fuel price hike

What to expect: Oil traders are now anticipating that downside risk on oil prices remains limited unless there is a material change in expectations for the duration of the pandemic’s impact on demand.

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