Oil near $60 a barrel; on highest point in a year

oil prices production

Crude oil prices reached their highest point in a year, and closed near to $60 a barrel supported by hopes of economic growth and the supply cuts pushed by the Organization of Petroleum Exporting Countries (OPEC).

First, president Joe Biden pledge to spend a $1,9 trillion for a coronavirus aid, gained momentum this Friday, rising hopes for economic recovery. Also, new orders for U.S.-made goods reached a peak this Friday, consolidating U.S. manufacturing sector.

Consequently, investors rose hopes for demand recovery in the energy sector, sending oil prices to highest levels since February 2020.

Brent crude was up 85 cents this Friday, and reached $59,69 a barrel; while the American oil, the West Texas Intermediate, increased a full dollar, and closed at $57,25 a barrel. Both contracts reached their highest point since February and June, 2020, respectively.

Jeffrey Halley, an analyst at brokerage OANDA, also said: “The conditions still remain supportive for oil markets. Oil should find plenty of willing buyers on any material dip.”

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Oil expected to keep growing this week

In addition, Brent is expected to rise more than 6% this week; as it gets near to the $60 per barrel mark. The last time it traded at such a price, the economy was open; the covid-19 pandemic was not yet a reality and people were free to travel. Consequently, demand was much higher.

Similarly, the vaccine rollout is rising hopes of lockdowns being eased, boosting demands for oil and its derivatives. However, demand enthusiasts such as OPEC remain wary and do not hope for demand recovery until 2022.

Additionally, oil also gained support from OPEC’s cuts to production. The organization and its allies, maintained its discipline in production levels and agreed on keeping it this Wednesday.

Michael McCarthy, chief market strategist at CMC Markets, also agreed on the fact that “indeed “OPEC+ discipline has been a real positive.”

Further on, a weekly report on U.S inventories by the Energy Information Administration, showed they had been drawn to their lowest levels since March. Thus, confirming OPEC’s cuts have had the desired effect.

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