The Strategist

Oil prices hit new yearly high

02/03/2021 - 02:28

European oil prices hit a new yearly high, comfortably above the $58 per barrel level.

According to Reuters, European oil prices have surpassed $58 a barrel for the first time since the second decade of February 2020. Quotes for Russia's Urals reached $58.6 a barrel, while North Sea Brent rose to $58.3 a barrel. 

The value of the nearest futures for Brent oil reached $58.05 per barrel. The increase compared to the previous day's close was almost 4%. Up until then, oil prices had been in the $54-56/b range for most of January.

High discipline of OPEC+ deal participants, as well as oil supply disruptions from Nigeria and Libya, resulted in a slight increase in fuel supply in the market. Prices were also supported by the expansion of the coronavirus vaccination and cold weather in the Americas and Asia. 

At the same time, market participants still see a supply shortage and are actively buying up near-term contracts. Under such conditions, the prices may exceed $60 per barrel, but analysts are not yet confident that they will stay there for long.

At the same time the market calmly reacted to messages about decrease in demand for fuel in China: for example, China's Ministry of Transport reported that passenger traffic on Chinese New Year will be 40% lower than in 2019 due to restrictions on mobility of citizens amid a difficult viral situation.