Upside Momentum Could Carry Market to $57.41 Over Short-Run

Oil treads warily higher amid patchy vaccine roll-outs new coronavirus variants

OIL prices rose around 1 per cent on Tuesday after major crude producers showed they were reining in output roughly in line with their commitments, extending gains for a market thrown out of kilter by weak demand during the coronavirus pandemic.

The price of oil clears the February 2020 high ($54.66) as itextends the upward trend established in November, and the OPEC Joint Ministerial Monitoring Committee (JMMC) meeting scheduled for February 3 may lead to higher oil prices as Secretary General Mohammad Barkindo insists that the group and its allies "stand ready to take any necessary actions".

The Organization of the Petroleum Exporting Countries was pumping 25.75 million barrels per day (bpd) in January, the survey found, up 160,000 bpd from December. Another 2.3 million-barrel weekly decline is expected, analysts and traders said citing a Wood Mackenzie report.

Brent crude was up 51 cents, or 0.9 per cent, at $56.86 a barrel by 0134 GMT, while U.S. oil gained 53 cents, or 1 per cent, to $54.08 a barrel. Brent crude oil for April delivery rose $1.11 to $57.46 a barrel.

Oil has been helped by surveys indicating members of the OPEC+ alliance lifted output in January by less than was allowed under their agreement. "Having OPEC+ singing from the same hymn page is music to every oil trader's ears".

The American Petroleum Institute (API) on Tuesday reported a decrease of 4.261 million barrels of crude oil in the USA crude oil inventories for the week ending January 29.

Meanwhile, OPEC may be adding less supply onto the market than expected following its January decision. Firstly, most analysts expect winter demand to be higher than usual in the USA amid one of the worst snowstorms to hit the North East region in years. The contract settled 0.2% lower at $2.845 per million Btus. Phil Flynn, an analyst at Price Futures Group in Chicago commented that "it looks like OPEC compliance is really pushing the complex higher, as well as the expectation that we will see USA inventories tighten over the next few weeks". The big East Coast storm and cold temperatures had provided a lift to prices, according to Colin Cieszynski, chief market strategist at SIA Wealth Management.

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