Oil prices surged for a fourth consecutive session on February 25, 2021, to reach the highest levels in over 11 months, supported by lower crude production in the US and monetary easing policies.
Data shows that Brent crude futures for April gained 19 cents or 0.3% to trade at $67.23 a barrel by 0400 GMT. On the other hand, the US West Texas Intermediate crude for April was trading at $63.30 a barrel, up 8 cents, which translates to a 0.1% gain. Both of these contracts touched their highest levels since January earlier in the session with Brent trading at $67.44 and WTI at $63.67.
An assurance from the United States Federal Reserve that interest rates would remain low for a while enhanced investors’ risk appetite and the global financial markets. ING analysts said in a note:
“Comments from Fed Chairman, Jerome Powell, earlier in the week relating to the need for monetary policy to remain accommodative have probably helped, but sentiment in the oil market has also become more bullish, with expectations for a tightening oil balance.”
Interestingly, a rare winter storm in Texas has made the US crude production plunged by over 10%, which translates to 1 million barrels per day, according to data by the Energy Information Administration. Fuel supplies in the biggest oil consumer in the world may also tighten as its refinery crude inputs have plunged to their lowest since September 2008.
The Organization of the Petroleum Exporting Countries and their allies like Russia (OPEC+), will meet on March 4. In this meeting, they are expected to discuss a modest easing of oil supply curbs from April, given a significant recovery in prices. But, some strongly suggest holding steady for now since the risk of new setbacks in the battle against the current health crisis may arise.
More voluntary cuts by Saudi Arabia in February and March have appeared to tighten global supplies and supported the market prices.