Oil prices rise due to expectations that OPEC + should maintain production By Reuters

By Florence Tan

SINGAPORE (Reuters) – Oil prices rose on Monday with the expectation that OPEC and allied producers could limit production to current levels in February at a meeting later in the day, as the coronavirus pandemic remains concerned. with high demand in the first half.

for March it was at $ 52.42 a barrel, up 62 cents or 1.2%, by 0348 GMT, while US West Texas Intermediate crude for February rose 55 cents, or 1.1%, to $ 49.07 the barrel.

Broader trends in macro momentum, including a weaker dollar and investor positioning for a recovery in the oil sector this year, may be supporting oil prices, Energy Aspects analyst Virendra Chauhan said.

“Perhaps there is some positive feeling from OPEC + seeking to restrict supply in light of the virus growing in the west,” he added.

Mohammad Barkindo, secretary-general of the Organization of Petroleum Exporting Countries (OPEC), said on Sunday that while demand for oil is expected to increase 5.9 million barrels per day (bpd) to 95.9 million bpd this year, the group sees many downside demand risks in the first half of 2021.

“We are just beginning to emerge from a year of deep investment cuts, huge job losses and the worst destruction of demand on record,” he said.

Prices ended 2020 about 20% below the 2019 average, still recovering from the impact of the global economic blockade measures imposed to combat COVID-19, which cut fuel demand, although major world producers have agreed to record cuts in production throughout the year.

OPEC and allied producers, including Russia, a group known as OPEC +, decided at a meeting last month to increase production by 500,000 barrels a day in January, anticipating an increase in demand, and agreed to meet every month to review production.

Analysts at Energy Aspects and RBC Capital said OPEC + is likely to maintain production levels for January in February.

“We think the group of producers will choose to forgo any further production increases for February, with cases of COVID-19 continuing to rise and the vaccine launch slower than expected,” said Helima Croft of RBC Capital.

In the United States, crude oil production came under pressure from weak prices and lukewarm demand, down more than 2 million barrels per day (bpd) in October from the beginning of this year, revealed a government report on January 1 .