Brent oil rises to highest since February after Saudi Arabia output cut

Tokyo - US WTI futures gained 13 cents, or 0.26per cent, to $50.06 a barrel.

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By Reuters

Published: Wed 6 Jan 2021, 8:20 AM

Brent oil prices rose on Wednesday to the highest since February after Saudi Arabia agreed to make bigger cuts in output than expected during a meeting with allied producers, while industry data showed US crude stockpiles fell last week.

Brent crude rose as much as 0.6per cent to $53.94 a barrel, the highest since Feb. 26, 2020. It was at $53.79 a barrel at 0147 GMT and gained 4.9per cent on Tuesday.

US West Texas Intermediate (WTI) futures gained 13 cents, or 0.26 per cent, to $50.06 a barrel. The contract on Tuesday closed up 4.6 per cent at $49.93, its highest since Feb. 24, 2020.

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Saudi Arabia, the world’s biggest oil exporter, agreed on Tuesday to make additional, voluntary oil output cuts of 1 million barrels per day (bpd) in February and March, after a meeting with the Organization of the Petroleum Exporting Countries (Opec) and other major producers that form the group known as Opec+.

The reductions agreed by Saudi Arabia were included in a deal to persuade other producers in the Opec+ group to hold output steady.

With coronavirus infections spreading rapidly in many parts of the world producers are trying to support prices as demand takes a hit from new lockdowns being put in place.

“The decision came as a huge surprise as the organisation struggled yesterday to agree to a deal,” Capital Economics said in a note.

It “adds weight to our view that the oil market will be in a deficit ... which will help lift the price of Brent to $60 per barrel by end-year,” it said.

US crude oil inventories dropped by 1.7 million barrels in the week to Jan. 1 to 491.3 million barrels, data from industry group the American Petroleum Institute showed late on Tuesday.

Photo: Reuters
Reuters

Published: Wed 6 Jan 2021, 8:20 AM

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