Crude oil prices rallied high at the last trading session of the week, nearing the $60 price level amid leading producers’ commitment to continued supply cuts and positive signs at the world’s largest economy’s recovery.
What you must know: At the time of writing this report, Brent crude futures traded at $59.24 a barrel and West Texas Intermediate futures rose by 0.73% to $56.64 a barrel.
- Oil traders are going long on hopes that a $1.9 trillion stimulus package proposed by Joe Biden last month would see the light of day. Stronger-than-expected orders for U.S. goods in the month of Dec also boosted bullish sentiments across the market spectrum.
- OPEC+’s most recent attitude has been a real positive for crude oil prices, on the account of Saudi Arabia, a leading oil producer, already curbing its oil production by about 1 million barrels of crude oil.
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave key insights on macros pushing oil prices at yearly highs.
“There was a nice V-looking chart for WTI today with the commodity hit on the release of the EIA’s Annual Energy Outlook 2021 (projecting it will take years to get back to 2019 levels of US energy consumption), only to quickly bounce back.
“Oil spent much of New York session above WTI U$56 a barrel, extending gains from Wednesday when OPEC+ maintained oil output cuts, as optimism over a much-discussed US stimulus package also proved supportive.
“When demand drives commodity prices, it has a more bullish impact and leaves a more lasting reflection on price action.”
What to expect: The full OPEC+ ministerial meeting in early March could be more difficult because production increases will likely be on the table, especially if oil prices continue to trend up.