Brent oil hits year-high above $60 per barrel
THE benchmark oil contract Brent North Sea rose above $60 per barrel on February 8 to hit the highest level since the coronavirus pandemic began to spread globally almost a year ago.
Oil prices have recovered owing to the Organisation of the Petroleum Exporting Countries (OPEC) and its allies cutting production after the coronavirus pandemic slashed demand, according to analysts.
SEB Research chief commodities analyst Bjarne Schieldrop noted: “It is worth reminding oneself that OPEC+ is the single most important reason for why the oil price reached $60.
“It is because of large cuts by
OPEC+ . . . since May.”
Crude and other assets are winning support also from the prospect of a $1.9 trillion US stimulus package.
European and Asian stock markets also climbed on February 8, while the dollar rose against its main rivals.
Adding to the upbeat mood is data showing new Covid infection rates, with last week seeing the lowest level since October, while governments begin to get to grips with inoculation programmes.
Brent crude hit $60.27 per barrel on February 8, the first time it has exceeded $60 since February last year.
After lockdowns began to spread in March, oil prices dropped off a cliff, with US oil contract WTI even briefly turning negative.
And despite production cuts, oil supplies remain high.
Schieldrop added: “Global oil demand is still hurt badly by the global pandemic.”
Recovery in part relies on US lawmakers approving President Joe Biden’s huge stimulus package that should help the jobs market.
Figures last week showed the US economy created less than half the number of jobs expected last month, which analysts said reinforced the need for a new, big spending bill.
Treasury Secretary Janet Yellen on February 7 warned that the US job market was “stalling” and might not recover for years without support.
But she told CNN that if the spending package was passed, “we would get back to full employment next year”.
Despite the weak jobs reading, all three main indices on Wall Street ended on a positive note on February 5, with the Nasdaq and S&P 500 clocking up new records.
IG trading group senior market analyst Joshua Mahony said: “Markets are continuing last week’s bullish momentum, with Friday’s [February 5] jobs report providing a fresh reminder of the need to push a major stimulus package across the line.”
THE EU’s top diplomat on February 7 said Russia was rejecting constructive dialogue with the EU and that Europe must draw the consequences, including the possibility of new sanctions.
In a blog post, Josep Borrell said the shock expulsion of three EU diplomats during his two-day visit to Moscow, showed that Russia “did not want to seize this opportunity to have a more constructive dialogue with the EU”.
The bloc “will have to draw the consequences” he wrote, insisting that “it will be for member states to decide the next steps, and yes, these could include sanctions”.
Borrell’s trip, which ended on February 6, had been a controversial journey that divided the EU’s 27 member states, with France and Germany backing dialogue with the Kremlin.
Other countries backed a harder line after the jailing of Kremlin critic Alexei Navalny and a crackdown on pro-Navalny protesters that has seen more than 10,000 people arrested in recent weeks.
Borrell’s trip took a negative turn when Moscow expelled diplomats from Poland, Germany and Sweden just hours after he met with Russian foreign minister Sergei Lavrov to discuss ties.
The former Spanish foreign minister described the trip as “very complicated” and said he returned to Brussels “with deep concerns”.
“It seems that Russia is progressively disconnecting itself from Europe and looking at democratic values as an existential threat,” he said.
Borrell, whose views do not necessarily represent the 27, defended his visit arguing that criticising Russia from a distance “will not bring greater security to the EU”.
“We have to face challenges, including meeting others in their home turf, just when negative events are unfolding” in order to better assess the action to take.
“If we want a safer world for tomorrow, we have to act decidedly today and be ready to take some risks,” he said.
Borrell will debrief his trip to foreign ministers from the 27 member states on February 22 and EU leaders will discuss their strained ties with Moscow at a summit next month.
Drawing up EU sanctions are strictly up to the members states and require unanimity among the 27.