Oil still climbing as Opec+ maintains supply cuts

London — Oil prices rose towards $69 a barrel on Tuesday as investors focused on prospects for tighter supply due to extended output curbs by oil cartel Opec and its allies, including Russia (Opec+), and amid growing hopes of a recovery in demand.

Crude was at its highest level since the start of the pandemic on Monday after Yemen’s Houthi forces fired drones and missiles at Saudi oil sites on Sunday. Saudi Arabia said it thwarted the strike and prices slipped as supply fears eased.

Brent crude rose 51c, or 0.8%, to $68.75 by 9.20am GMT, after trading as low as $67.61. US West Texas Intermediate (WTI) crude added 34c to $65.39.

“Dips have lately been viewed as buying opportunities,” said Tamas Varga of broker PVM. “Last week’s Opec+ meeting will ensure the global oil balance will get tighter in the foreseeable future.”

On Monday, Brent rose to $71.38, its highest since January 8 2020 and US crude hit $67.98, the highest since October 2018.

“With a structural undersupply in the physical market now, any dips in oil prices are likely to attract physical buyers’ attention,” said Jeffrey Halley of broker Oanda.

Prices also rose on expectations of economic recovery after the US Senate approved a $1.9-trillion stimulus package, outweighing a stronger dollar, which tends to crimp investor demand for commodities.

US treasury secretary Janet Yellen said on Monday that the aid package would provide enough resources to fuel a “very strong” US economic recovery. The US House of Representatives must still approve it.

On Thursday, Opec+, decided to broadly stick to output cuts, sparking a further rally.

In another development that would support prices, US crude stockpiles are expected to drop. The first of this week’s reports, from the American Petroleum Institute, is out at 21.30pm GMT. 

Reuters