Brent crude reached $56.75 a barrel this week, its highest level since last February. Saudi Arabia’s announcement last week that it will cut output by one million barrels per day (mbpd) from February gave crude its best week in four months; Brent is already up by more than 8% since the start of the year.
Saudi Arabia and Russia, the two-leading producers in the Opec+ cartel, have spent much of the past year squabbling about how to respond to the Covid-19 crisis, says Oilprice.com. The Saudis have consistently favoured supply cuts in order to keep prices high, while the Russians argue that strategy will just hand profits over to US shale producers (who operate independently of Opec+). Saudi Arabia’s unilateral cut ends the group’s focus on sharing output curbs equally, with Russia and Kazakhstan set to raise output by 75,000bpd from next month.
Oil markets had a bout of the “hebee-jeebies” earlier this week as parts of China moved back into lockdown, says Stephen Innes of Axi. A durable drop in Chinese activity is a key risk to oil markets. Nevertheless, the scale of the Saudi output cuts provides a decent cushion against bad news. US political developments are also keeping traders optimistic: Democrat control of the Senate means more regulation of US shale producers is likely, which could put a lid on US production. “Risks remain”, but there could be more upside to come.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
8 of the best converted properties for sale nowThe best converted properties for sale – from an apartment in the former Hartley’s Jam factory on London’s Southbank, to a converted 18th-century mill in Itteringham, Norfolk
-
How taking a two-year career break could leave a £26k hole in your pensionCareer breaks are increasingly common but it is important to take steps to protect your pension, as gaps compound over time
-
Will Comstock crash – or soar?Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.
-
'As AGMs go digital, firms must offer a new form of scrutiny for shareholders'Opinion Technology has rendered big AGM meet-ups obsolete, but the board still needs to be held to account, says Matthew Lynn
-
Unilever braces for inflation amid tariff uncertainty – what does it mean for investors?Consumer-goods giant Unilever has made steady progress simplifying its operations. Will tariffs now cause turbulence?
-
Two ways to tap into monopoly profits from airportsMost investors can’t get their hands on airports. Here are two ways you can
-
Fat profits: should you invest in weight-loss drugs?The latest weight-loss treatments could transform public health and the world economy. Should you invest?
-
How investors could profit from Ramsden Holdings' four-part growth strategyRamsdens Holdings offers a diversified set of financial and retail services and a juicy yield, says Dr Michael Tubbs
-
How to invest in the booming insurance marketThe insurance sector is experiencing rapid growth after years of stagnation. Smart investors should buy in now, says Rupert Hargreaves
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocksOpinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
