Oil rises above $48 with OPEC+ talks set to start second day

Oil gained ahead of a resumption of OPEC+ talks that were unexpectedly suspended due to a disagreement over whether to raise output in February.

Futures in New York rose above $48 a barrel after dropping the most in two weeks on Monday. Discussions will restart on Tuesday after a majority of members, including Saudi Arabia, opposed Russia’s proposal for another supply hike.

The talks are happening against a shaky short-term demand backdrop. England was ordered into a third lockdown until mid-February, Germany is set to extend its curbs and Japan is considering another state of emergency for the Tokyo area. Several Asian refiners won’t be getting into long-term supply contracts for fuel sales this year, a sign the region’s energy consumption recovery is far from certain, although a cold snap in the Northern Hemisphere is aiding demand for heating fuels.

Crude had risen to near $50 a barrel earlier on Monday, aided by a weak dollar. The early stages of COVID-19 vaccine roll-outs have stoked optimism that demand will rebound with the global economy, and oil has emerged as a trade to hedge inflation. But with so many mobility curbs still on the horizon, the threat to consumption remains significant.

“There are not many places where we are seeing a relaxation of restrictions,” said Warren Patterson, head of commodities strategy at ING Group. “They have little option but to maintain current cuts,” he said on OPEC+’s plans.

Prices

  • West Texas Intermediate for February delivery rose 1.6 per cent to $48.40 a barrel at 8:00 a.m. in New York
  • Brent for March settlement gained 1.6 per cent to $51.92

© 2021 Bloomberg L.P.

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.