BRENT CRUDE HITS 11- MONTH HIGH ABOVE $ 57 ON TIGHT SUPPLY EXPECTATIONS

Oil hit an 11- month high just below$ 57 a barrel on Tuesday, bolstered by Saudi Arabia’s plans to limit supply, offsetting worries that rising coronavirus cases globally would curtail fuel demand. Brent crude settled up 92 cents, or 1.7 per cent, at $ 56.58 a barrel by after touching its highest level since last February at $ 56.75. US West Texas Intermediate ( WTI) gained 96 cents, or 1.8 per cent, to $ 53.28.

Saudi Arabia plans to cut output by an extra onemillion barrels per day ( bpd) in February and March to keep inventories in check. The Saudi cut is part of an Opec- led deal in which most producers will hold output steady in February. Last year’s record cuts from OPEC and its allies helped oil recover from historic lows reached in April.

But Opec+ compliance with pledged oil output curbs fell to

75 per cent in December, among the lowest levels since the supply pact started in May 2020, tanker tracker Petro- Logistics said on Tuesday, which could weigh on oil prices. US crude oil production was also expected to fall by 190,000 bpd in 2021 to 11.1million bpd, according to an Energy Information Administration report, a smaller decline than its previous forecast for a drop of 240,000 bpd. “Storage at Cushing is only 10.2 million barrels belowthe all- time record high, so there is no problem with supply here in the US, but the complex is responding positively to this chatter about undersupply,” said Bob Yawger, director of energy futures at Mizuho. Oil also gained on expectations for a drop in US crude stockpiles. Analysts expect crude inventories to fall by 2.7million barrels for a fifth straight week of declines.