The price of oil (BZ=F) rose on Thursday, after falling around 1% earlier in the day, staging a slight recovery after the International Energy Agency (IEA) warned that prices were unlikely to mount a dramatic and sustained rise despite COVID-19 vaccines.
On Wednesday, IEA boosted the number of oil barrels to 100,000-barrels-a-day (bd) in its monthly report. This is the amount by which it expects global oil demand to rebound in this year, which is 5.5 million bd.
The Paris-based body expects American crude production to fall by 180,000 barrels a day. It expects demand to only be 1.4 million barrels a day short of pre-pandemic levels, in the final quarter of 2021.
"Oil's sharp rally to near $70 (£50) a barrel has spurred talk of a new supercycle and a looming supply shortfall. Our data and analysis suggest otherwise," it said.
Brent Crude, the international benchmark, was up 0.25% to $67.93 on Thursday. It has risen around 80% since the end of October last year.
Earlier this month, Brent jumped to $71 a barrel after one of Saudi Arabia’s key oil facilities came under missile and drone attack from hostile forces in Yemen.
The storage tank that was targeted at Ras Tanura in the country’s Gulf coast is the world’s largest crude terminal. It is capable of exporting roughly 6.5 million barrels a day, representing nearly 7% of oil demand.
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The Organisation of Petroleum Exporting Countries (OPEC) and its allies also decided this month to mostly maintain their supply cuts for April.
An increase of 500,000 barrels a day was widely expected, however, Saudi Arabia agreed to maintain a voluntary 1 million barrels per day cut despite calls from some smaller producers to allow a modest loosening.
Russia was allowed a 130,000 barrel a day increase in quota and Kazakhstan 20,000.
The group is awaiting a more solid recovery in demand from the coronavirus pandemic despite a recent rally in oil prices in the past two months.
Saudi Arabia’s oil minister Prince Abdulaziz bin Salman, acknowledged that the market had improved since January, but wanted to “urge caution and vigilance,” adding that “…before we take our next step forward, let us be certain that the glimmer we see ahead is not the headlight of an oncoming express train.”
The next OPEC+ meeting is on 1 April.
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