By Adedapo Adesanya
Crude oil prices showed no sign of slowing down on Monday as Brent crude hit $63 per barrel while the West Texas Intermediate (WTI) crossed the $60 mark.
The commodity continued its 13-month high, spurred by tensions in the Middle East and freezing weather in regions across the United States.
At the market yesterday, the Brent crude gained 85 cents or 1.36 per cent to sell at $63.28 per barrel, while the United States’ WTI crude rose by 65 cents or 1.09 per cent to trade at $60.12 per barrel.
According to reports, oil prices reacted positively to news of Saudi-led coalition fighting in Yemen intercepting an explosive-laden drone fired by the Iran-aligned Houthi group, raising fears of fresh tensions.
Tensions in the oil-rich region always lead to prices of oil rising because it accounts for a considerable amount of global oil output.
Also, cold weather afflicted portions of the US and raised demand for power and fuel while simultaneously threatening to restrict production in Texas, one of the major hubs for oil in the largest producing nation.
According to market analysts, cold weather means that many oil wells may be shut-in. Water is produced along with oil and that water can freeze up equipment, they explained.
The major crude benchmarks also received support from hopes for more US stimulus even as the easing of coronavirus lockdowns helped support the rally after prices gained around 5 per cent last week.
The US President, Mr Joe Biden, pushed for the first major legislative achievement of his term on Friday, turning to a cross-party group of local officials for help for his $1.9 trillion coronavirus relief plan.
The long-awaited $1.9 trillion package has not been passed but it is believed that once it gains enough support, it will fly as it will help the US economy, which is struggling from the effect of the COVID-19 pandemic.
Oil prices have also rallied over recent weeks as supplies tighten largely due to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the group, OPEC+.
Russian Deputy Prime Minister, Mr Alexander Novak, said the global oil market is on a recovery path and prices this year could average $45-$60 a barrel.
“We’ve seen low volatility in the past few months. This means the market is balanced and the prices we are seeing today are in line with the market situation,” Mr Novak was quoted as saying.
There are also considerations in Norway whether oil workers will embark on strike. Such an action could disrupt production at fields responsible for more than 30 per cent of the country’s crude output.
