By Elizabeth Low and Alex Longley sure 02/23/2021
(Bloomberg) – Oil rose nearly $ 62 a barrel with investment banks and traders predicting the market rally may go further.
New York futures gained 0.8% on Tuesday and are up nearly 30% so far this year. The market is heading into what could be the tightest quarter since at least 2000, according to Morgan Stanley, while Socar Trading SA sees the global benchmark Brent hit $ 80 a barrel this year as the glut of accumulated inventory during the Covid-19 pandemic is exhausted by the summer.
The loss of oil production after the Great Freeze in the United States will also help the market firm as much of the world emerges from lockdowns, according to the Trafigura Group. Fuel flows from Asia to the United States have increased after the cold blast left some of the largest refineries facing a slow and messy restart.
Oil surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels per day in February and March, with Goldman Sachs Group Inc. predicting rally to accelerate as demand outstrips supply global. Russia and Riyadh, however, will travel to an OPEC + meeting again next week with differing views on adding more crude to the market.
“The freeze in the United States has turned out to be favorable because production has been reduced,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect Russia to push for a significant increase in production,” which could soon weigh on prices, he said.
- West Texas Intermediate gained 50 cents to $ 62.20 a barrel at 10:44 a.m. London time
- Brent for April settlement added 0.8% to $ 65.79
Brent’s quick time spread has firmed into a bullish retrograde pattern at its widest for over a year. The spread rose above $ 1 per barrel on Tuesday before falling back to 96 cents. This compares to 25 cents at the start of the month.
The global oil market has been under-supplied by 2.8 million barrels a day so far this year, Morgan Stanley said in a note, raising its Brent forecast for the third quarter to $ 70 a barrel. Goldman raised its estimate for the same period to $ 75, while Socar said $ 100 is possible within the next 18-24 months.
Other news from the oil market:
- China’s oil inventories rose 16 million barrels in the week of February 14 to 1.01 billion barrels, up for the third week in a row, according to data provided by trade information firm Kayrros.
- U.S. shale explorers have lost hundreds of millions of dollars in oil production due to last week’s historic freeze that crippled Texas and left millions of dollars without power and water for days.
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