By Adedapo Adesanya
Brent crude witnessed a gain of more than 2 per cent on Friday, specifically rising by 2.96 per cent or $1.61 to trade at $55.99 per barrel.
The appreciation in the price of the international crude benchmark was majorly influenced by the voluntary cut in supply by Saudi Arabia, spurring an increase in demand.
During the session, the situation caused the price of the United States benchmark futures, West Texas Intermediate (WTI) crude, appreciated by 2.77 per cent or $1.41 to $52.24 a barrel.
Through the week, both benchmarks recorded weekly gains of more than 6 per cent in what seems like one of the best weeks for oil prices.
A commitment by Saudi Arabia to cut back production has helped restore the shaky market balance despite the concerns about shut-ins from COVID-19.
Earlier this week, Saudi Arabia pledged extra, voluntary oil output cuts of 1 million barrels per day in February and March as part of a deal under which most producers in the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) will hold production steady during new lockdowns.
This decision allowed market participants to widen their positions on firm spot demand.
Analysts, however, noted that prices could see a correction in the coming months if fuel demand remains constrained by the pandemic. Restrictions on travel and other activity around the world to contain a surge in COVID-19 cases are weighing on fuel sales, weakening the prospect of an energy demand recovery in the first half of 2021.
A resurgence of cases among global economies is threatening to further encroach on the recent bull with the US recording its highest death toll yet this week, killing more than 4,000 people in a single day.
China also reported the biggest rise in daily cases in more than five months and Japan is considered extending a state of emergency in its capital.
Despite this, more vaccination news helped the market as the United Kingdom approved a third coronavirus vaccine after its Pfizer/BioNTech and Oxford/AstraZeneca jabs had been approved. The UK became the first western nation to license a vaccine against COVID-19.
The UK government has agreed to buy 10 million more doses of the Moderna vaccine to add to the 7 million it had already ordered, after the Medicines and Healthcare products Regulatory Agency (MHRA) authorised it on Friday.
It was also a week that saw the Energy Information Administration (EIA) reported a decline in US crude inventories.
Stockpiles fell by 8 million barrels in the week to January 1 to 485.5 million barrels, their biggest decline since August, exceeding analysts’ expectations for a 2.1 million-barrel drop.
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