Oil prices rise by more than 1 per cent in early Tuesday trade. Brent Crude rose by 1.14 per cent or 0.86 cents, to trade at $76.98 a barrel at 04:21 am CDT.
U.S. West Texas Intermediate (WTI) soared by 1.07 per cent, or 0.76 cents, to the price of $71.53 a barrel.
Due to The Organisation of the Petroleum Exporting Countries (OPEC+) output growth and significant price reductions by Saudi Arabia, the world’s largest exporter, the benchmarks fell more than 3 per cent and 4 per cent, respectively, on Monday.
OPEC+ oil output increased in December as increases in Angola, Iraq, and Nigeria offset ongoing cuts by Saudi Arabia and other members of the larger OPEC+ alliance, holding back price gains, according to a Reuters survey released on Friday.
Moreover, Saudi Arabia lowered the official selling price of its flagship Arab Light crude to Asia in February to the lowest level in 27 months due to increased supply.
“Saudi Arabia’s sharp price cuts and OPEC+ increased production have offset supply concerns caused by escalating geopolitical tensions in the Middle East,” CMC Markets analyst Leon Li commented.
The Houthi attacks on the Red Sea still caused disruptions in the oil trading movement.
Suvro Sarkar, head of DBS Bank’s energy sector team, predicted that oil prices would likely hover around $75 to $80 per barrel soon, “barring an unforeseen flare up in the Middle East situation.”
“On the supply side, there are some bullish factors from the closure of Libya’s largest oilfield, which has affected around 0.3 million barrels per day of oil production,” he added.
Moreover, as traders maintained their bets for a wave of rate cuts by the Federal Reserve this year, the dollar, which has been supporting prices, paused its rally on Tuesday.
Notably, when crude becomes more affordable for holders of other currencies, a weaker dollar raises oil prices.
As inflation starts to decline, Federal Reserve Governor Michelle Bowman indicated on Monday that she now views U.S. monetary policy as “sufficiently restrictive” and that she would be willing to support future interest rate reductions.
The American Petroleum Institute industry group is set to release U.S. inventory data, later in the day.
