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UPDATE 6-Oil hits highest in a year on growth hopes, OPEC+ cuts

· 02/04/2021 23:42
UPDATE 6-Oil hits highest in a year on growth hopes, OPEC+ cuts

Brent hits highest since Feb 2020

OPEC+ maintains policy aimed at tightening supply

U.S. crude stockpiles fall to lowest since March

Updates prices

By Alex Lawler

- Oil hit its highest in a year on Friday, closing in on $60 a barrel, supported by economic revival hopes and supply curbs by producer group OPEC and its allies.

New orders for U.S.-made goods rose more than expected in December, pointing to continued strength in manufacturing. President Joe Biden's drive to enact a $1.9 trillion coronavirus aid bill also gained momentum on Friday.nL1N2K926DnL1N2KB0UF

Brent crude LCOc1 was up 85 cents, or 1.4%, at $59.69 by 1438 GMT after hitting its highest since Feb. 20 last year at $59.79. U.S. crude CLc1 was up $1.02, or 1.8%, at $57.25, after reaching $57.28, its highest since Jan. 22 last year.

"The conditions still remain supportive for oil markets," said Jeffrey Halley, an analyst at brokerage OANDA. "Oil should find plenty of willing buyers on any material dip."

Brent is on track to rise more than 6% this week. The last time it traded at $60 a barrel, the pandemic had yet to take hold, economies were open and people were free to travel, meaning demand for gasoline, diesel and jet fuel was much higher.

The rollout of COVID-19 vaccines, however, is fuelling hopes of lockdowns being eased, boosting fuel demand. But even demand optimists such as OPEC do not expect oil consumption to return to pre-pandemic levels until 2022. nL8N2GZ3WT

Oil also gained support from supply curbs by producers. OPEC and its allies, collectively known as OPEC+, stuck to their supply tightening policy at a meeting on Wednesday. Record OPEC+ cuts have helped to lift prices from historic lows last year. nL1N2K91JQ

"OPEC+ discipline has been a real positive," said Michael McCarthy, chief market strategist at CMC Markets.

Further boosting the market, a weekly supply report showed a drop in U.S. crude inventories to their lowest since March, suggesting that output cuts by OPEC+ producers are having the desired effect. EIA/S


(Additional reporting by Sonali Paul in Melbourne, Roslan Khasawneh and Koustav Samanta in Singapore;
Editing by Jason Neely, David Goodman and Emelia Sithole-Matarise)

((alex.lawler@thomsonreuters.com; +44 207 542 4087; Reuters Messaging: alex.lawler.reuters.com@reuters.net))