Oil prices rise with new high-risk demands, strong availability of OPEC and Reuters

© Reuters. PICTURES: A 3D oil-based printing press appears on the front of the Opec logo on the photo, April 14, 2020. REUTERS / Dado Ruvic / Illustration

Author Koustav Samanta and Sonali Paul

SINGAPORE (Reuters) – Oil prices soared on Tuesday, with investors increasingly at risk of awaiting information from a US Federal Reserve chairman over interest rates and as some oil producers continue to struggle to raise prices.

futures earned 60 cents, or 0.7%, to $ 81.47 a barrel at 0740 GMT, after dropping 1% in the previous quarter.

US West Texas Intermediate (WTI) futures futures rose 68 cents, or 0.9%, to $ 78.91 a barrel, down 0.8% on Monday.

The weaker US dollar helped support oil prices on Tuesday, as it made oil cheaper for those with other currencies.

The US Senate committee will hold talks this week with Federal Reserve Chairman Jerome Powell and vice-chairman Lael Brainard which could provide a wealth of ideas for the US central bank to tighten monetary policy.

The recent decline in oil prices was due to concerns over global COVID-19 inflation that could reduce oil demand.

“The prevalence of viruses is a cause for concern because restrictions affect mobility and the need for fuel,” said Ravindra Rao, chief research officer at Kotak Securities. “However, despite the growing number of cases, no major economy is facing a major shutdown.”

“The nature of the virus, its availability and market performance are very important factors affecting crude oil in the near future,” he added.

Some analysts say a strong presence from the Organization of Petroleum Exporting Countries (OPEC), Russia and its allies, called OPEC +, does not meet the requirements also helps prices.

“The market could still benefit from more goods and more risk from Russia,” ANZ Research commodity analysts said. Political tensions intensified as Russia mobilized troops on the Ukrainian border.

Investigators have shown that OPEC is adding a slowdown to the OPEC + agreement, as some countries, including Nigeria, are not producing the agreed volume.

“Demand remains high – especially if OPEC continues to struggle to meet its target as the share of 400,000 barrels per day increases monthly, as demand grows,” said OANDA expert Craig Erlam.

Libya, which has no means of supplying OPEC, has been affected by pipeline repairs and oil spills. However, on Monday, production resumed at the El Feel oil refinery, where the military suspended operations last month.

The market is awaiting U.S. oil data and supplies from the American Petroleum Institute (API), an industry group, for 2130 GMT Tuesday, followed by data from the US Energy Information Administration Wednesday.

Six analysts surveyed by Reuters expect that stocks dropped by about 2 million barrels a week until January 7, which could be the seventh week of a downward spiral.

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