
(Source: HartEnergy.com; Anton-Burakov, MIKHAIL GRACHIKOV/Shutterstock.com)
LONDON—Oil prices rose on Feb. 8 to their highest in just over a year, with Brent nudging past $60 a barrel, boosted by supply cuts among key producers and hopes for further U.S. economic stimulus measures that can boost demand.
Brent was up 69 cents, or 1.2%, at $60.03 a barrel by 7:18 CT, and U.S. West Texas Intermediate rose 64 cents, or 1.1%, to $57.49 a barrel.
Both contracts were at their highest levels since January 2020.
What’s Affecting Oil Prices This Week? (Feb. 8, 2021)
“Oil prices are back close to pre-pandemic levels,” said Norbert Rücker, analyst at Swiss bank Julius Baer.
“Support seems robust and the narrative sees the oil market swiftly burning through the remaining crisis-surplus, potentially running into tightness later this year,” he added.
The oil market continues to tighten with deeper cuts from Saudi Arabia who pledged extra supply cuts in February and March on the back of reductions by other members of OPEC and its allies.
In a sign that prompt supplies are tightening, the six-month Brent spread hit a high of $2.54 on Feb. 8, its widest since January last year.
OCBC’s economist Howie Lee said the world’s top exporter Saudi Arabia sent a “very bullish signal” last week when it kept monthly crude prices to Asia unchanged despite expectations of small cuts.
“I don’t think anybody dares to short the market when Saudi is like this,” he added.
A weaker dollar against most currencies on Monday also supported commodities, with dollar-denominated commodities becoming more affordable to holders of other currencies.
Investors are also keeping a close watch on a $1.9 trillion COVID-19 aid package for the United States that is expected to be passed by lawmakers as soon as this month.
Hopes that Iranian oil exports would soon return to the market have been dampened, supporting oil prices.
U.S. President Joe Biden said the United States would not lift sanctions on Iran simply to get it back to the negotiating table, while Iran’s Supreme Leader Ayatollah Ali Khamenei said all sanctions should be lifted first.
Stronger crude prices are, meanwhile, encouraging U.S. producers to increase output.
The U.S. oil rig count, an early indicator of future output, rose last week to its highest since May, according to energy services firm Baker Hughes Co.
Recommended Reading
Production Begins at Shell’s GoM Whale Facility
2025-01-09 - Shell’s Whale floating production facility in the Gulf of Mexico has reached first oil less than eight years after the field’s discovery of 480 MMboe of estimated recoverable resources.
E&P Highlights: Jan. 13, 2025
2025-01-13 - Here’s a roundup of the latest E&P headlines, including Chevron starting production from a platform in the Gulf of Mexico and several new products for pipelines.
E&P Highlights: Jan. 6, 2025
2025-01-06 - Here’s a roundup of the latest E&P headlines, including company resignations and promotions and the acquisition of an oilfield service and supply company.
E&P Highlights: Jan. 21, 2025
2025-01-21 - Here’s a roundup of the latest E&P headlines, with Flowserve getting a contract from ADNOC and a couple of offshore oil and gas discoveries.
E&P Highlights: Feb. 18, 2025
2025-02-18 - Here’s a roundup of the latest E&P headlines, from new activity in the Búzios field offshore Brazil to new production in the Mediterranean.