Melbourne: Oil prices rose and fell mixed on Friday due to the upcoming production cuts in Saudi Arabia and the reduction in US oil inventories that help to deal with the risk of slowing fuel demand due to delayed vaccine delivery and infectious new strains of coronavirus.
U.S. West Texas Intermediate (WTI) crude futures slipped 3 cents to $52.31 a barrel at 0151 GMT, after falling 1.0% on Thursday.
Brent crude futures for March rose 14 cents, or 0.3%, to $55.67 a barrel, after falling 0.5% in the previous session.
The Brent March contract expires on Friday. The more active April contract rose 11 cents, or 0.2%, to $55.21.
Production cuts are supporting the market. Saudi Arabia plans to reduce oil production by 1 million barrels per day in February and March, and compliance with production restrictions by the Organization of Petroleum Exporting Countries (OPEC+) and the Allies (called OPEC+) improved in January.
Commonwealth Bank analyst Vivek Dhar said that Saudi Arabia’s effective production cut means that OPEC+’s production cut will increase from 7.2 million barrels per day in January to 8,125 million barrels per day in February.
“The OPEC+ production strategy is still working and hopes are high we will get J&J’s vaccine approved sometime next week,” OANDA analyst Edward Moya said in a note.
A 9.9 million barrel drawdown in U.S. oil inventories last week and forecasts for a small drop in U.S. oil production in February are also helping support the market.
However, concerns about the stagnation of vaccines and the spread of infectious new variants of the coronavirus have limited market growth.
Analysts pointed out that there is news that South African variants have been introduced into the United States. Despite the successful vaccination of the population, Israel still has a large influx of new cases, which is worrying, and the problem of vaccine distribution in Europe and the United States is frustrating.
Axi global strategist said: “Oil investors’ concerns about vaccine supply and launch may lead to a long-term lockdown in Europe, which may be the two most destructive feedback loop culprits in the rotating oil market’s negative risks. “Stephen Innes.