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Hazloc Heaters
Copper Tip Energy Services
Copper Tip Energy
Hazloc Heaters

Oil Holds Near 7-Year High as Traders Await OPEC+ Move on Supply

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These translations are done via Google Translate
(Bloomberg) Oil held near a seven-year high as investors await OPEC+’s move at its meeting this week, while a blast of icy weather in the U.S. is threatening supply.

West Texas Intermediate futures fell 0.2%, after the strongest performance in about a year last month. Crude’s recent surge has been supported by a tight global market and geopolitical concerns over Ukraine, even though Russia has denied it plans to attack its neighbor. While most analysts expect OPEC+ to maintain its supply increases, Goldman Sachs Group Inc. warned the recent price surge could mean the group may deliver more than expected.

Oil posted its biggest monthly gains since February amid tight supplies

Demand signals and the risk of an escalating Russia-Ukraine crisis are likely to be discussed by the Organization of Petroleum Exporting Countries and its allies when they convene on Wednesday. The group is expected to ratify another 400,000 barrel-a-day increase for March, although there have been signs in recent months the alliance has not met its production target in full.

“Oil markets are steady with traders cautious ahead of the OPEC+ meeting,” said Daniel Hynes, a senior commodities strategist at Australia & New Zealand Banking Group Ltd., adding that the group is likely to continue with its monthly increase in quotas. “However, the market will be keen to hear whether producers are able to increase output given the struggles they have had.”

Sky Eye Measurement

A bullish signal is emerging in the U.S. with Texas facing an Arctic blast this week that may freeze oil and natural gas production areas, potentially causing another supply shock. Still, it currently looks less likely to lead to a repeat of last February’s cold snap that triggered catastrophic blackouts and left more than 200 people dead.

Sky Eye Measurement
  • WTI for March delivery slipped 16 cents to $87.99 a barrel as of 11:31 a.m. in London
  • Brent for April was 0.2% lower at $89.07

Oil has roared higher over the past year as energy consumption continues to bounce back from the hit caused by the pandemic. That’s depleted inventories and underpinned a bullish backwardated pricing structure, with near-term contracts commanding a premium to those further out. Banks including Goldman Sachs have forecast crude will hit $100 a barrel this year.

Despite its warning about an surprise OPEC+ move on production, Goldman Sachs said it remained bullish on oil. Stockpiles are “incredibly tight,” and given the strength of demand there’s a need for sharply higher prices, the bank’s analysts said in a Jan. 31 note.

Related coverage:
  • The world’s seaborne oil flows are on course for a small gain in January following a sharp drop in Libyan exports.
  • Traders are upping bets on a stronger crude market, with Brent’s pricing structure at the most bullish in eight years.
  • U.S. shale’s biggest explorers are expected to post a surge in production in the final three months of last year.
  • India’s gasoline and diesel sales slumped in January from a month earlier as the third coronavirus outbreak pushed people back to their homes.

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