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Oil Prices Hit 1-Year High Amid US Growth, Cuts in Supplies


Fri 05 Feb 2021 | 07:24 PM
Taarek Refaat

Oil prices rose on Friday to their highest level in a year, to continue to post strong gains due to signs of economic growth in the United States and the continued commitment of producers to curb crude supplies.

Brent crude futures rose 28 cents, or 0.5% to $59.12 a barrel, after reaching $59.41, their highest level since February 2020. Also, Analysts expected Brent to rise 6% this week, and the benchmark crude is heading for an 8% weekly gain.

West Texas Intermediate (WIT) crude futures prices increased 29 cents, or 0.5% to $56.52 a barrel after touching $56.84, the highest since Jan. 2020.

"Increased confidence in the economy and the imminent recovery of oil demand are two major incentives for crude," said Vandana Hari, energy analyst at Vanda Insights.

"At the moment, the simultaneous scarcity of supplies due to additional Saudi cuts reinforces the favorable atmosphere ... Brent may be on its way to the important level of $60," Hari added.

The markets were encouraged by stronger than expected orders for US goods in December, indicating the strength of the manufacturing sector, and hopes for a $1.9 trillion quick stimulus, , proposed by US President Joe Biden worth, to mitigate the repercussions of corona pandemic.

"OPEC+ alliance is really positive," said Michael McCarthy, chief market strategist at CMC, referring to OPEC and allies led by Russia.

This week, the alliance confirmed its support for major supply cuts that helped reduce swollen global oil inventories. "We see signs of better economic growth, oil prices will go up and take off," McCarthy added.