Oil rises on hopes of recovery in global demand
Oil prices rose on Monday, with the US crude extending its gains for the second straight day, while Brent on track for its first daily gain out of 4 days, on hopes over the global demand recovery, which offset the impact of rising US drilling activity.
US crude rose 1.0% to $52.69 a barrel, after opening at $52.17, and hit a low of $51.66, and Brent crude rose 1.2% to $55.68 a barrel, after opening at $55.02, and hit a low of $54.63.
US crude yesterday rose 0.2% yesterday, while Brent crude futures fell 0.6% and posted the third straight daily loss.
Oil prices gained 7.5% during January, the third monthly gain in a row, after the OPEC-Plus collation decided to increase output by only 500,000 barrels, instead of the 2 million barrels increase that was agreed upon starting this year, which came in addition to Saudi Arabia’s pledge to voluntary cut its oil production.
These gains are also based on hopes about rising Asian demand, as Asia is the largest fuel-consumer in the world, as most of the major Asian countries depend on oil imports due to their weak production levels.
While oil prices rose today thanks to hopes about the global demand for fuel, as more Covid-19 vaccines were proven successful in trials, while infections declined in some countries.
Energy experts projected that oil demand will rise as more of the world’s population get their shots of Covid-19 vaccine.
Saudi Arabia announced a voluntary output cut of about one million barrels per day during February and March to balance the market.
Baker Hughes revealed on Friday that the US drilling and exploration rigs rose 6 rigs last week, the tenth straight weekly increase.
The total operating rigs rose to 295, the highest level since the week ending May 1, 2020.
The increase in the US drilling activity boosted the US production by more than 47% since mid-2016 to a total of 13.1 million barrels per day in March 2020, and held recently around 11 million bpd due to the coronavirus pandemic, but the US is still the world’s largest oil producer.
