By Adedapo Adesanya
The price of crude oil rose above $60 for the first time in almost a year on Monday and this was boosted by supply cuts among key producers and hopes for further economic stimulus measures in the United States that can propel demand.
At the market yesterday, the global benchmark crude, Brent, gained $1.20 or 2.02 per cent to sell at $60.54 per barrel, while the United States’ West Texas Intermediate (WTI) climbed $1.07 or 1.88 per cent to trade at $57.92 per barrel.
By attaining the $60 mark, oil prices are back to pre-pandemic levels. The recent bulls seen in the commodity happened as stockpiles tightened with Saudi Arabia pledging extra supply cuts in February and March following reductions by other members of the Organization of the Petroleum Exporting Countries and their allies (OPEC+).
It also continues to draw support as the demand outlook for oil improved amid the global rollout of COVID-19 vaccines, even though at a slow pace.
A weaker US Dollar against most currencies on Monday also supported commodities, with dollar-denominated assets becoming more affordable to holders of other currencies.
Investors are also keeping a close watch on a $1.9 trillion COVID-19 aid package for the US that is expected to be passed by lawmakers as soon as this month.
Democrats and their allies in the US Congress forged ahead with their stimulus plan as lawmakers approved a budget outline that will allow them to muscle through in the coming weeks without Republican support.
Also, hopes that Iranian oil exports would soon return to the market have been dampened, further supporting oil prices.
Even news that South Africa had halted the rollout of AstraZeneca’s vaccine after a study showed it gave only limited protection against the country’s more contagious variant of the virus did not stop Monday’s rally.
President Joe Biden said the US would not lift sanctions on Iran simply to get it back to the negotiating table, while Iran’s Supreme Leader Ayatollah Ali Khamenei said all sanctions should be lifted first.
Stronger crude prices are, meanwhile, encouraging US producers to increase output.
The US oil rig count, an early indicator of future output, rose last week to its highest since May, according to data.
