Producers Restrain Output
OPEC crude production rose for a seventh month in January but the increase was smaller than expected, a Reuters survey found.
The Organization of the Petroleum Exporting Countries (OPEC) was pumping 25.75 million barrels per day (bpd) in January, the survey found, up 160,000 bpd from December.
Market analysts say OPEC has been showing more discipline in keeping to its commitments as surging COVID-19 infections threaten any recovery in demand.
Also, voluntary cuts of 1 million bpd by OPEC’s de facto leader, Saudi Arabia, are set to be implemented from the beginning of February through March.
Russian output increased in January but in line with the agreement on reducing production, while in Kazakhstan oil volume fell for the month. Both countries are members of the OPEC+ grouping that banded together to help support prices with production cuts.
Russian oil and gas condensate output rose by 120,000 barrels per day (bpd) to 10.16 million bpd in January from December, following the agreement on production restraint, two sources familiar with the data told Reuters on Monday.
Kazakhstan cut its oil production by 2% in January from the previous month due to power outages, which also improved its compliance with the OPEC+ deal, according to two industry sources familiar with the matter and Reuters calculations.
Perhaps providing a boost to prices on Tuesday is growing optimism over demand as traders appear to be betting on a speedy U.S. economic recovery.
On Monday, Goldman Sachs wrote that it thought Brent crude oil could hit $65 a barrel later in the year. UBS forecast Brent would reach $63 a barrel by the second half of this year and $65 by the first quarter of 2022.
“Once critical mass of the population is vaccinated this year, we think oil demand will rise further,” UBS said, adding “with OPEC and its allies (OPEC+) endeavoring to keep global oil production below demand, we expect petroleum inventories to keep falling as well.”
“Crude is being supported by many small factors this week – expected drawdowns in Cushing, a sudden rise in winter fuel demand amid colder weather, and further talks on Capitol Hill about stimulus checks,” said John Kilduff, partner at Again Capital LLC in New York.
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