Oil traders remained cautious at the mid week trading session, as oil prices pulled back some of their gains. This is coming in spite of reports that a strong rebound in energy demand will continue.
At press time, Brent oil futures lost about 0.2% to trade around $61 a barrel.
Oil traders are now focusing on the rising COVID-19 caseloads amidst reports showing global oil stockpiles are shrinking, and there are expectations that U.S. supplies will also continue to drop.
Recent data from the American Petroleum Institute recorded a drop of 3.5 million barrels. Energy experts had earlier predicted a 1.340-million-barrel gain, while a 4.261-million-barrel drop was recorded during the past week.
READ: Oil prices near $60 a barrel, OPEC+ stays resolute on supply cuts
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave key insights on the macros holding oil prices around $60 per barrel.
“There is seldom one sole factor at play at any given time, whether it’s the oil curve offering up an attractive alternative in the chase for yield or oil contracts providing a favorable inflation hedge after all at every market street corner discussions around inflation protection continue to resonate.
A neat feature of the oil market is that it is cyclical. It does tend to gather momentum. And it rarely, if ever, settles into a comfortable equilibrium as we saw from overnight price action.
But it might become more apparent that OPEC sees US$60 as the low end of the price range that incentivizes sufficient new production capacity to the market offering attractive producer returns.
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What to expect: Oil traders for the midterm will focus their attention on the March 4 OPEC+ meeting as a risk to the current view at a time energy experts expect Saudi Arabia’s unilateral Feb/Mar cuts to be rolled back.
