Oil prices rose more than 2%, close to their highest levels in nearly a year, today, Wednesday, after government data showed that US crude stocks fell to their lowest level since March, while OPEC + kept the supply cut agreement unchanged.
By 1605 GMT, Brent crude futures were up $ 1.37, equivalent to 2.4%, to reach $ 58.83 a barrel, their highest levels since last February. US West Texas Intermediate crude futures increased $ 1.45, or 2.7%, to $ 56.21 a barrel, its peak since January 2020.
The US Energy Information Administration said that US stockpiles of crude oil fell last week to 475.7 million barrels, the lowest level since March, while refinery operating rates increased 0.6 percentage points.
“The refineries are back in business, which is supporting crude … This is a supportive report overall,” said Phil Flynn, chief analyst at Price Futures Group in Chicago.
The market also received support from the latest estimate by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, the group known as OPEC +, that crude stocks will fall below the five-year average by June.
This indicates that the production cuts implemented by the producers have succeeded in returning the balance to the market.
The OPEC + Joint Ministerial Committee did not issue a recommendation regarding oil production policy other than what was decided last month, saying that commitment to oil production cuts reached 101% in December.
It indicated that oil stocks in developed countries fell for the fifth consecutive month in 2020.
On the other hand, she noted that the gradual distribution of vaccines around the world is a positive factor for the rest of the year, and strengthens the global economy and oil demand.
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OPEC + expects production cuts to keep the market in deficit over the course of the year, and for the deficit to rise to a peak of 2 million barrels per day in May, even though the group revised downward its forecast for demand growth, as revealed by a document seen by Reuters yesterday.
Market sentiment also received support from news that Democrats in the US Congress have taken the first steps towards introducing a $ 1.9 trillion aid plan to mitigate the fallout from Corona, proposed by President Joe Biden without support from Republicans.
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