UPDATE 8-Oil rises to 11-month high, logs weekly gain on Saudi output cut

  • Reuters
  • Commodities News
UPDATE 8-Oil rises to 11-month high, logs weekly gain on Saudi output cut
Credit: © Reuters.

* Brent rises 8.1%, WTI up 7.7% in the week

* Rally in global equities also feeds appetite for risk

* U.S. drillers add oil rigs for 7th week in a row -Baker Hughes

* Latest global lockdowns delay fuel demand recovery (New throughout; updates prices, market activity and comments to settlement)

By Laila Kearney

NEW YORK, Jan 8 (Reuters) - Oil prices hit their highest level in nearly a year on Friday, gaining 8% on the week, supported by Saudi Arabia's pledge to cut output and strong gains in major equity markets.

Brent crude LCOc1 settled at $55.99 a barrel, climbing $1.61, or 3%, on the day and 8.1% on the week. West Texas Intermediate crude futures (WTI) CLc1 closed at $52.24 a barrel, gaining $1.41, or 2.8%, also its highest since late February. WTI posted a weekly gain of 7.7%.

Saudi Arabia this week pledged extra, voluntary oil output cuts of 1 million barrels per day (bpd) in February and March as part of a deal under which most OPEC+ producers will hold production steady during new lockdowns. kingdom, the de facto leader of the Organization of the Petroleum Exporting Countries, was at odds with some other producers that wanted to boost output to head off U.S. shale companies from capturing more market share. Eventually, an agreement was reached to allow Russia and others to boost output while the Saudis restrict theirs.

"This week the Saudis stepped up to try to take over the market and took ownership of getting prices stabilized," said John Kilduff, partner at Again Capital LLC in New York. "It seems like they're on a mission again to get prices back up."

The number of U.S. oil rigs rose for the seventh straight week, gaining eight to 275 this week to its highest since May, according to energy services firm Baker Hughes Co. RIG/U

Analysts said oil prices could see a correction in the coming months if fuel demand remains constrained by the pandemic. Strict restrictions on travel and other activity around the world to contain a surge in COVID-19 cases are weighing on fuel sales, weakening the prospect of an energy demand recovery in the first half of 2021. pandemic claimed its highest U.S. death toll yet this week, killing more than 4,000 people in a single day, while China reported its biggest rise in daily cases in more than five months, while Japan may extend a state of emergency beyond the greater Tokyo region. global equities rally pushed Japan's Nikkei and U.S. stock benchmarks to new records, as investors focused on further stimulus to mend the economic damage of the pandemic. U.S. Congress may soon approve more pandemic relief, a scenario that became more likely after two Georgia Democrats won Senate seats that handed Democrats control of both houses of Congress once Biden is sworn in.

"The energy complex (is) placing particular focus on the democratic victories in the Georgia elections that, in turn, boost the likelihood of larger stimulus measures," said Jim Ritterbusch of Ritterbusch and Associates.

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  • tejshree thakur @tejshree thakur
    after all production cut is too much low. that is you increase avg 19mbl and cut 1mbl..is it jokes. yes.. over all OPEC, +and non OPEC deals is feke with respect to avg44mbl vs 6 mbl cut. mean s 38$ extra add daily basis. and smaller and smallest with short to medium consumer demand essaly fulfilled.. I think 28-49$ is perfect price of WTI
    Like 2
    • ADITYA GUPTA @ADITYA GUPTA
      when it will come down sir???
      Like 0
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