Oil finishes at 1-year high after modest weekly decline in U.S. crude inventories

Feb

04

by: Myra P. Saefong 

Oil futures climbed on Wednesday to end at another one-year high, finding support from expectations that economic stimulus measures will boost energy demand and a modest weekly decline in U.S. crude inventories.

The Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, held a monthly committee meeting Wednesday, but did not make changes to output policy.

In a statement, the committee acknowledged Saudi Arabia’s “significant additional voluntary supply adjustment” that took effect on Feb. 1 and will run through March. In January, the Saudis pledged to unilaterally cut its own output by 1 million barrels a day to offset higher production from Russia and Kazakhstan.

“Saudi Arabia, the de facto leader of the group has taken the reins and committed to reducing their own output significantly enough to bolster the entire global market,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. “Without their decision to do so, it is hard to believe oil would be trading where it is with all other fundamental factors remaining constant.”

The committee Wednesday also noted that overall conformity with original production cut adjustments was at 101%. Since April, OPEC+ has lowered output by a cumulative 2.1 billion barrels, it said.

West Texas Intermediate crude for March delivery rose 93 cents, or 1.7%, to settle at $55.69 a barrel on the New York Mercantile Exchange. Front-month contract prices posted another finish at the highest since January 2020.

April Brent crude the global benchmark, added $1, or 1.7%, to $58.46 a barrel on ICE Futures Europe, settling at their highest since late February of last year.