Oil hits highest in a year on growth hopes, OPEC+ output cuts

• Brent hits highest since Feb 2020, set for 6pc weekly gain

NEW YORK: Oil prices rose on Friday, hitting their highest in a year and closing in on $60 a barrel, supported by economic revival hopes and supply curbs by producer group OPEC and its allies.

Oil was also supported as US stock markets hit record highs on signs of progress toward more economic stimulus, while a US jobs report confirmed the labour market was stabilizing.

US employment growth rebounded moderately in January and job losses in the prior month were deeper than initially thought. President Joe Biden’s drive to enact a $1.9 trillion coronavirus aid bill gained momentum.

Brent crude was up 50 cents, or 0.9%, at $59.34 by 1:14 p.m. ET (1814 GMT) after hitting its highest since Feb. 20 at $59.79. US crude was up 56 cents, or 1%, at $56.79, after reaching $57.29, its highest since Jan. 22 last year.

US crude futures were on track for a gain of nearly 9% for the week, the biggest percentage gain since October. Brent was on track for 6% weekly gain.

“Brent is eyeing the $60 level now that OPEC+ has successfully eased most supply side concerns and optimism on the COVID front improves globally,” said Edward Moya, senior market analyst at OANDA in New York.

“The fundamentals remain solid for crude, but a consolidation seems likely given the recent runup.”

Brent was headed for a weekly rise of more than 6%. When it last traded at $60 a barrel, the pandemic had yet to take hold, economies were open and demand for fuel was much higher.

The rollout of COVID-19 vaccines has fed hopes of demand growth, but even optimists such as OPEC do not expect oil consumption to return to pre-pandemic levels until 2022.

“What is really helping the market today, and is a more valid reason for the price rise we see, once again comes from Saudi Arabia and its top firm, Aramco,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen.

Aramco raised its Arab Light official selling price (OSP) to Northwest Europe by $1.40 a barrel from the previous month. This could signal Saudi Arabia is more confident in the demand outlook, feeding bullish sentiment, Tonhaugen said.

OPEC and allies, collectively known as OPEC+, stuck to their supply tightening policy at a meeting on Wednesday. Record OPEC+ cuts have helped lift prices from historic lows last year.

“OPEC+ discipline has been a real positive,” said Michael McCarthy, chief market strategist at CMC Markets.

Further boosting the market, a weekly supply report showed a drop in US crude inventories to their lowest since March.

The US oil rig count, an early indicator of future output, has risen for five straight months. In the latest week, oil rigs rose by four to 299, the highest since May, according to energy services firm Baker Hughes Co.