Oil Continues Its Winning Streak As Demand Recovery Optimism Grows

However, France's Total is increasing its involvement in renewables: File Image/PixaBay

A seventh straight day of price gains was achieved by oil on Tuesday–its longest streak of gains in two years– as traders maintained faith that the Covid vaccination rollouts would lead to steady fuel demand recovery and that the Organization of the Petroleum Exporting Countries (OPEC) would stay true to maintaining its production cutbacks.

Brent settled up 53 cents to $61.06 per barrel, and West Texas Intermediate rose 39 cents to $58.36 per barrel.

Of OPEC's self-restraint led by Saudi Arabia, Jim Ritterbusch, president of Ritterbusch and Associates, said, “The Saudis’ intent to eliminate a global supply surplus appears to be on track and capable of boosting crude prices further.”

Edward Moya, senior market analyst at Oanda Corp, added, “The markets are becoming very forward-looking and there’s optimism that we’re going to see a strong rebound in demand.”

Once the OPEC cutbacks end in April of next year, oil output from Russia will recover quickly, according to the International Monetary Fund, which on Tuesday also urged investment in the oil sector to support current output.

It stated, “Keeping oil production at current levels will require significant investment; the full-cost break-even price [for Russia] is therefore closer to $30–$40 per barrel.”

Oil production in Russia declined last year for the first time since 2008 and reached 10.27 million barrels per day, its lowest in nearly a decade.

Meanwhile, with an adjusted net income of $1.13 billion, France's Total on Tuesday posted better than expected fourth quarter earnings as oil prices stabilized; however, the company is making a concentrated effort to pivot away from oil, with the group having already spent over $2 billion on acquisitions in the renewables sector this year, and planning to spend 20 percent of its investment budget for 2021 on this drive.