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Crude Oil Surges As OPEC Weighs Output Cut, Iran Seizes South Korean Tanker

Summary:
Crude oil futures are surging on Tuesday as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, extended talks regarding production levels. Oil prices were also supported by reports that Iran seized a South Korean ship, which comes as the country started enriching uranium up to 20%. Could US crude test before the week is over? February West Texas Intermediate (WTI) crude oil futures soared .63, or 3.42%, to .24 per barrel at 13:44 GMT on Tuesday on the New York Mercantile Exchange. US crude prices had a rocky start to 2021, sliding about 1%. Brent, the international benchmark for oil prices, is also popping in early trading. March Brent crude futures advanced .66, or 3.25%, to .75 a barrel on London’s ICE Futures exchange. Brent slipped close

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Crude oil futures are surging on Tuesday as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, extended talks regarding production levels. Oil prices were also supported by reports that Iran seized a South Korean ship, which comes as the country started enriching uranium up to 20%. Could US crude test $50 before the week is over?

February West Texas Intermediate (WTI) crude oil futures soared $1.63, or 3.42%, to $49.24 per barrel at 13:44 GMT on Tuesday on the New York Mercantile Exchange. US crude prices had a rocky start to 2021, sliding about 1%.

Brent, the international benchmark for oil prices, is also popping in early trading. March Brent crude futures advanced $1.66, or 3.25%, to $52.75 a barrel on London’s ICE Futures exchange. Brent slipped close to 2% on Monday.

According to an OPEC document dated January 4, Saudi Arabia and broader allies opposed increasing output due to renewed lockdowns and restrictions in response to the variant of the coronavirus. Russia is pushing for greater production, something that officials made clear before OPEC engaged in virtual discussions in January.

Could this be the start of Moscow and Riyadh’s clashing over output policy like last year?

For now, OPEC is assessing a potential production cut of 500,000 barrels per day (bpd) for February. It is also examining other strategies that consist of either stable production or a boost of 500,000 bpd. Commerzbank analysts think a resolution could be ironed out by the end of Tuesday.

There had already been fears that the compromise reached by OPEC+ in December, which would see production adjusted gradually, would be of little good to anyone. However, it is still the case, as it was then, that no agreement would be the worst outcome of all. We therefore expect some kind of consensus to be reached today.

In a research note, Fitch Solutions said that near-term demand growth would either stall or decline in North America, Europe, and the Middle East for the next several months.

Crude markets were taken aback by new developments in Tehran. The Iranian military seized a South Korean oil tanker in the Strait of Hurmuz. The Iranian government is continuing to enrich uranium, a move that would delay any removal of US sanctions on the regime, which would prevent the nation’s return to the export market.

In other energy commodities, February natural gas futures rose $0.114, or 4.45%, to $2.675 per million British thermal units (btu). February gasoline futures picked up $0.0475, or 3.46%, to $1.4204 per gallon. February heating oil futures jumped $0.0475, or 3.25%, to $1.5095 a gallon.

If you have any questions and comments on commodities today, use the form below to reply.


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Andrew Moran
I am a full-time professional writer. Prior to my self-employment, I worked as a reporter for Digital Journal covering the politics beat and The Toronto Times reporting on the city’s entertainment scene. I currently write mostly about business, marketing and finance

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