Energy Weekly Report: Motilal Oswal
According to Motilal Oswal, Oil ended the first week of New Year with a gain of nearly 8% as OPEC leader Saudi Arabia continued with its lower-for-longer supply strategy.
January 12, 2021 / 02:45 PM IST
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Motilal Oswal's report on Energy Weekly
Oil ended the first week of New Year with a gain of nearly 8% as OPEC leader Saudi Arabia continued with its lower-for-longer supply strategy. Saudi Arabia announced an additional 1Mbpd output cut over Feb and March. OPEC+ agreed most producers would hold output steady in February and March while allowing Russia and Kazakhstan to raise output by a modest 75,000 bpd in February. The oil market’s attention has been almost entirely on the potential for reduced global supplies. The decision by the Saudis was a big deal and it’s an underpinning for prices. Clearly, maintaining the oil price was paramount and they were willing to let others take advantage in order to accomplish that. This was followed by large US crude oil inventory drawdown reported by the EIA earlier in the week, which only provided further support.
Crude gains looks questionable as the market can its attention back to fuel demand issues in the coming weeks, and also to how well the U.S. and the rest of the world are coping in their recovery from COVID which can lead to sell off at higher levels.
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