Oil prices rose to their highest levels since February, following Saudi Arabia’s massive voluntary production cut and a sharp drop in U.S. crude inventories.
Futures contracts pared gains in thin post-settlement trade after protesters stormed the U.S. Capitol building in an attempt to thwart the certification of Donald Trump’s loss in November’s U.S. presidential election.
Brent crude settled up 70 cents, or 1.3%, at $54.30 a barrel. Earlier in the session, it hit a high of $54.73 a barrel, a level not seen since Feb. 26, 2020.
West Texas Intermediate (WTI) futures settled 70 cents higher, or 1.4%, at $50.63 a barrel. The contract touched $50.94 a barrel, its highest since late February.
Both contracts pared gains after in post-settlement trade as unrest in Washington overtook bullish fundamental news. Both contracts were only 39 cents higher per barrel at 19:46 GMT.
During the session, the market took into account falling US crude oil stocks and Saudi production cuts.
U.S. crude oil inventories fell sharply while fuel stocks rose, according to the EIA announced on Wednesday.
Crude oil inventories fell by 8 million barrels to 485.5 million barrels on the week of January 1, exceeding analysts’ expectations of a decrease of 2.1 million barrels. However, the decline in crude oil stocks is typical of energy companies to avoid heavy year-end tax bills.
With the rapid spread of coronavirus infections, producers are concerned to contribute to the negative impact of dropping demand.
OPEC + agreed that most producers would keep their production stable in February and March, while allowing Russia and Kazakhstan to increase production by another 75,000 barrels in both February and March.
According to a survey, OPEC oil production rose six months to 25.59 million barrels in December, which was supported by a recovery in Libyan production and smaller increases elsewhere