Rise in oil prices persist on Monday, February 8, and Brent prices crossed the $60 a barrel mark. Investors’ positive hopes are aligned with the expected early acceptance in the United States of a new fiscal support program, as well as the success of OPEC+’s attempts to adjust the supply of oil to existing market conditions. A potential rise in oil production in the United States can be noted among the risk factors at the moment, as current prices are very comfortable for shale producers.
On the day, April Brent crude futures were up 2.1% at $60.56, while March WTI crude futures traded up 2.00% at $57.97.
The oil market is reacting favorably to the possibility of the introduction in the United States of a proposed $1.9 trillion stimulus package soon. The House of Representatives adopted last Friday the 2021 budget bill, which contains the defined fiscal support program. According to House Speaker Nancy Pelosi’s declaration, the draft economic assistance could be implemented prior to the expiry of the enhanced unemployment benefits on March 15.
Moreover, the beneficial influence of the OPEC+ agreement, which made it possible to restrict the production of oil during a time of turmoil in the global economy and to balance supply and demand in the market, remains visible. Recall that Saudi Arabia took the initiative in February and March of this year to voluntarily reduce supply by 1 million b/d, which helped oil price growth.
At the same time, the threats of increasing oil production in the United States are also increasing in the sense of the premiums for ‘black gold’. According to Baker Hughes, an oilfield services firm, the number of active drilling rigs in the United States rose by 4 units last week, to 299 units, the highest figure since May of last year. In view of the fact that the United States is not constrained by the OPEC+ agreement, the rise in supply in the world may partially offset the positive impact of the OPEC+ agreement, leading to an increase in the deficit in the oil market and, ultimately, to a price change.