Oil prices rose slightly on Friday, but traded in a narrow range. Prices are rising due to voluntary cuts in Saudi Arabia’s oil supply and falling US oil stocks, offset by concerns over increased coronavirus variants and slow vaccine deliveries. In addition, the US economic stimulus package not coming quickly enough to support the market also adds to the negative effect.
Global benchmark Brent crude futures for March rose 44 cents, or 0.8%, to $55.97 a barrel by 16:13 GMT.
The Brent March contract expires on Friday. The more active April contract was up 25 cents, or 0.4%, at $55.35.
West Texas Intermediate (WTI) crude futures rose 7 cents, or 0.1%, to $52.36.
Both front month Brent and WTI were on track to post a weekly gain of less than 1%.
The constraints on the demand side due to the lockdown are met with a sufficient drop in supply which prevents prices from falling or rising significantly.
Saudi Arabia will reduce production by 1 million barrels a day in February and March. OPEC and its allies’ compliance with supply constraints increased in January.
OPEC oil production increased in January after OPEC + agreed to ease supply restrictions. However, the increase was less than the amount agreed under the agreement, as the involuntary decline in Nigerian exports limited the increase.
US oil stocks fell 9.9 million barrels last week, and a small drop in US oil production is forecast in February.
Despite all above, any loss of momentum in vaccination programs will weaken the strength of the global oil demand recovery.