![]() This signals that the oil market is tightening and demand is robust, paving the way for an oil rally. ![]() Per CME Group data, Brent futures for June delivery were trading about 54 cents below May contracts at the time of writing. crude hit the highest in more than two years (read: Sector ETFs to Benefit/Lose as Oil May Hit $70 Soon).Īdded to the positive sentiment is the state of backwardation in the oil futures market, where later-dated contracts are cheaper than the near-term contracts. Brent topped $71 per barrel for the first time since January 2020 while U.S. Notably, oil price has gained more than 30% so far this year. Additionally, a severe cold snap in Texas and the other parts of southern United States last month knocked out production of roughly 4 million barrels per day. The attack follows a recent escalation of hostilities in the Middle East region after Yemen’s Houthi rebels launched a series of attacks on Saudi Arabia. The terminal is capable of exporting roughly 6.5 million barrels a day - nearly 7% of oil demand. This is especially true as the Organization of the Petroleum Exporting Countries (OPEC), Russia and the oil-producing allies last week agreed to extend their production cuts into April.Īdditionally, a latest attack on a key Saudi Arabian refining facility - Ras Tanura on the Persian Gulf - has led to disruption in oil supply in the Kingdom's oldest and largest refinery and a key hub for its market-leading exports. The latest upbeat economic data from the United States and China also bolstered confidence in economic recovery (read: 4 Sector ETFs to Sizzle on Solid February Jobs Data).Īlong with a brightening demand outlook, tightening supply conditions are also giving a boost to the oil price. Rapid vaccination rollout, more vaccine progress and a new $1.9 trillion stimulus bode well for the economy. Energy has been outperforming this year buoyed by the expectation of swift global economic recovery that has ramped up the demand for energy.
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