Upside Momentum Could Carry Market to $57.41 Over Short-Run

Daniel Fowler
February 4, 2021

A Joint Ministerial Monitoring Committee of OPEC+ met virtually on Wednesday, pronouncing itself "optimistic for (a) year of recovery in 2021", a statement issued after the meeting said.

Oil has rallied from historic lows hit a year ago as the pandemic hit demand, thanks to record output cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+ that the group is beginning to unwind.

OIL prices rose around 1 per cent on Tuesday after major crude producers showed they were reining in output roughly in line with their commitments, extending gains for a market thrown out of kilter by weak demand during the coronavirus pandemic.

Oil extended gains after closing at the highest level in more than a year as declines in USA and Chinese crude stockpiles added impetus to a rally driven by tightening global supplies.

Russian output increased in January but in line with the agreement on reducing production, while in Kazakhstan oil volume fell for the month.

The JMMC is unlikely to recommend new policies, which will instead be tackled at the next full OPEC+ meeting in early March.

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Meanwhile, global stocks remained firm on Tuesday, with benchmark USA stock indexes moving up as investors have been encouraged by news on the pace of vaccine rollout in the US and the prospect of more fiscal aid from Congress, which may speed the economic recovery and energy demand. The American Petroleum Institute reported crude inventories fell by 4.3 million barrels last week, people familiar with the data said.

Futures in NY climbed as much as 1.1% after being swept up with a rally in USA stocks to rise 2.6% on Monday.

Weekly data on USA petroleum supplies will be released by the American Petroleum Institute late Tuesday, with official government data from the Energy Information Administration due Wednesday.

On Tuesday, March gasoline tacked on 1.6% to $1.6160 a gallon and March heating oil added 1.7% to $1.6746 a gallon.

Last month's pledge by Saudi Arabian Energy Minister Prince Abdulaziz bin Salman to slash production by a further 1 million barrels a day has buttressed global markets.

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