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.
- 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
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