Meanwhile, India's demand recovery prompts more spot crude purchases: File Image/PixaBay
The ongoing optimism over recovery demand thanks to the Covid vaccines, coupled with bullish remarks about oil from Russia, caused crude prices on Monday to reach their highest levels in 13 months.
Brent was up 70 cents, or 1.1 percent, at $63.13 per barrel, after peaking at $63.76 (its highest since Jan. 22 last year), while West Texas Intermediate gained 63 cents, or 1.1 percent, at $60.10 after touching $60.95 (the highest since Jan. 8 last year).
The activity followed Alexander Novak, deputy prime minister of Russia, who said the global oil market is on a recovery path and prices could average $45-$60 per barrel in 2021.
Alexander Novak, deputy prime minister, Russia
The prices we are seeing today are in line with the market situation
He added, “We’ve seen low volatility in the past few months, [and] this means the market is balanced and the prices we are seeing today are in line with the market situation.”
Oil was also said to be supported by news that a Saudi Arabia-led coalition fighting in Yemen said it intercepted an explosive-laden drone fired by the Iran-aligned Houthi group.
Also, freezing weather across the U.S. increased demand for power and fuel while simultaneously threatening to hamstring production in Texas, North Dakota, Oklahoma, and elsewhere–which in turn could propel crude prices even higher over the next day.
Meanwhile, another sign that demand is recovering was India, where Bharat Petroleum Corp., the country's second biggest state-owned refiner, has increased the proportion of spot crude purchases from Africa and North America to about 45 percent from about 30 percent normally.
Kumar Surana, chairman of Hindustan Petroleum, noted, “Gasoline demand growth is expected to sustain, because once you are used to private commuting, it’s difficult to shift back to public transport.
“Refineries will explore all possibilities to increase gasoline production.”
Vandana Hari, founder of Vanda Insights, summarized Monday's trading activity by noting, “The cold snap, the additional Saudi cuts, the fresh U.S. stimulus promise are all helping, but the single biggest factor–and one the doubters have probably been missing or disbelieving–is that Covid on a global level is in a retreat, for more than four weeks now.”