The price of March Brent crude oil futures rose above $57 per barrel. A similar level of Brent oil was last observed almost a year ago – on February 24, 2020.
During this time, Brent oil is trading at $ 56.53 per barrel.
In turn, WTI crude oil is trading at $ 53.26 a barrel, that is, 0.98% for February delivery. The price also reached its maximum values – up to $ 53.74 per barrel. It also last traded at this level almost a year ago – on February 20, 2020.
The growth in oil's value is influenced by data on a larger than expected reduction in oil reserves in the United States, whose statistics clearly came out positively. According to the American Petroleum Institute (API), oil reserves declined by 5.82 million barrels last week. Analysts previously forecasted much lower figures, namely 2.7 million barrels. At the same time, gasoline reserves increased by 1.9 million barrels. The US Department of Energy will make an official announcement of data on this topic a little later. In this case, analysts generally predict that the Ministry will report a decline in crude oil inventories around 1.9 million, while growth in gasoline inventories will be around 2.1 million barrels. If these forecasts coincide, oil's quotes will strengthen even more in their price positions.
China's rapid response to the suge of COVID-19 in the Northern province of Hubei also supported black gold's quotes. Investors were relieved that COVID-19 will not spread widely, which will lead to the decline in oil demand.
The negative dynamics of the US dollar exchange rate against other key world currencies is also very important for the strengthening of the quotes of oil. Commodities and the US currency often show an inverse relationship. A weaker dollar makes oil, which is denominated in the US currency. This makes it more attractive to holders of other currencies. And apparently, buyers of black gold will be lucky in the short-term. This, in turn, will affect the price of Brent, which may exceed $58 per barrel.
Market participants seem unaware of the continuing severe restrictions in many countries around the world, as it focuses on the future. It greatly hopes for successful vaccination and the subsequent strong economic recovery of the world.
However, certain risks for the oil market still exist, because such factors as a decrease in energy reserves and rising prices will encourage oil producers to increase their production.
