Oil was up Friday morning in Asia to its highest levels in year, ending the week on a strong note over producers’ commitment to continued supply cuts and positive signs of U.S. economic recovery.
Hopes that a $1.9 trillion stimulus package proposed by U.S. President Joe Biden in January would be passed soon, as well as stronger-than-expected orders for U.S. goods in December, also boosted investor sentiment.
“Organization of the Petroleum Exporting Countries and allies, or OPEC+, discipline has been a real positive,” CMC Markets chief market strategist Michael McCarthy told Reuters. He was referring to the cartel’s decision to continue the supply cuts that have helped bring global crude oil stockpiles down.
“And then when we have signs of better economic growth, then it’s up and away (for prices),” McCarthy added.
Also boosting the market is Chinese demand for crude oil, with industry tracking indicating that two tankers of North Sea crude oil are heading to China for March 22 and March 24, Axi global market strategist Stephen Innes told Reuters.
“When demand drives commodity prices, it has a more bullish impact and leaves a more lasting reflection on price action,” Innes added in a note.