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Oil rises to 11-month high, logs weekly gain on Saudi output cut

Brent crude settled at $55.99 a barrel, climbing $1.61, or 3%, on the day and 8.1% on the week

Crude Oil Price | Oil Prices | Saudi Arabia

Reuters  |  NEW YORK 

crude oil prices

By Laila Kearney

NEW YORK (Reuters) - hit their highest level in nearly a year on Friday, gaining 8% on the week, supported by Saudi Arabia's pledge to cut output and strong gains in major equity

Brent crude settled at $55.99 a barrel, climbing $1.61, or 3%, on the day and 8.1% on the week. West Texas Intermediate crude futures (WTI) closed at $52.24 a barrel, gaining $1.41, or 2.8%, also its highest since late February. WTI posted a weekly gain of 7.7%.

this week pledged extra, voluntary oil output cuts of 1 million barrels per day (bpd) in February and March as part of a deal under which most OPEC+ producers will hold production steady during new lockdowns.

The kingdom, the de facto leader of the Organization of the Petroleum Exporting Countries, was at odds with some other producers that wanted to boost output to head off U.S. shale companies from capturing more market share. Eventually, an agreement was reached to allow Russia and others to boost output while the Saudis restrict theirs.

"This week the Saudis stepped up to try to take over the market and took ownership of getting prices stabilized," said John Kilduff, partner at Again Capital LLC in New York. "It seems like they're on a mission again to get prices back up."

The number of U.S. oil rigs rose for the seventh straight week, gaining eight to 275 this week to its highest since May, according to services firm Baker Hughes Co.

Analysts said could see a correction in the coming months if fuel demand remains constrained by the pandemic. Strict restrictions on travel and other activity around the world to contain a surge in COVID-19 cases are weighing on fuel sales, weakening the prospect of an demand recovery in the first half of 2021.

The pandemic claimed its highest U.S. death toll yet this week, killing more than 4,000 people in a single day, while China reported its biggest rise in daily cases in more than five months, while Japan may extend a state of emergency beyond the greater Tokyo region.

A global equities rally pushed Japan's Nikkei and U.S. stock benchmarks to new records, as investors focused on further stimulus to mend the economic damage of the pandemic.

The U.S. Congress may soon approve more pandemic relief, a scenario that became more likely after two Georgia Democrats won Senate seats that handed Democrats control of both houses of Congress once Biden is sworn in.

"The complex (is) placing particular focus on the democratic victories in the Georgia elections that, in turn, boost the likelihood of larger stimulus measures," said Jim Ritterbusch of Ritterbusch and Associates.


(Additional reporting by Bozorgmehr Sharafedin in London and Yuka Obayashi in Tokyo; Editing by Marguerita Choy and David Gregorio)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Sat, January 09 2021. 07:02 IST