SINGAPORE- Oil prices rose on Monday, with Brent futures nearing $60 a barrel, boosted by supply cuts among key producers and hopes for further US economic stimulus measures to boost demand.
Brent crude for April touched a high of $59.95 a barrel and was at $59.85, up 51 cents, or 0.9 percent.
Front-month prices last hit $60 on Feb. 20, 2020.
US West Texas Intermediate crude futures advanced 54 cents, or 1 percent, to $57.39 a barrel, the highest since January last year.
“A weak US jobs report boosted hopes of further stimulus measures,” ANZ analysts said, adding that energy products and industrial metals benefited from an increased appetite for risk among investors.
A weaker dollar against most currencies on Monday also supported commodities, with dollardenominated commodities becoming more affordable to holders of other currencies.
Meanwhile Saudi Arabia’s pledge of extra supply cuts in February and March on the back of reductions by other members of the Organization of the Petroleum Exporting Countries and its allies, including Russia, is helping to balance global markets.
In a sign that prompt supplies are tightening, the six-month Brent spread settled at $2.33 on Friday after hitting a high of $2.44, its widest in a year.
Still, stronger crude prices are encouraging US producers to increase output, while anti-coronavirus lockdowns across parts of Europe and Asia are keeping a lid on fuel demand, analysts said.
The US oil rig count, an early indicator of future output, rose to its highest since May last week, according to energy services firm Baker Hughes Co. Meanwhile, hedge funds are turning bullish on oil once again, betting the pandemic and investors’ environmental focus has severely damaged companies’ ability to ramp up production.
Such limitations on supply would push prices to multi-year highs and keep them there for two years or more, several hedge funds said.
The view is a reversal for hedge funds, which shorted the oil sector in the lead-up to global shutdowns, landing energy focused hedge funds gains of 26.8 percent in 2020, according to data from eVestment. By virtue of their fastmoving strategies, hedge funds are quick to spot new trends.
Global oil benchmark Brent has jumped 59 percent since early November when news of successful vaccines emerged, after COVID-19 travel curbs and lockdowns last year hammered fuel demand and collapsed oil prices. Last week it hit pre-pandemic levels close to $60 a barrel.
US crude has climbed 54 percent to around $57 per barrel during the same period.
“By the summer, the vaccine should be widely provided and just in time for summer travel and I think things are going to go gangbusters,” said David D. Tawil, co-founder at New York-based event-driven hedge fund, Maglan Capital, and interim CEO of Centaurus Energy.