More upside to come for the oil price
The Brent crude oil price its highest level since last February this week. And there could be more gains to come.
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
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
Can I shield my ISAs from inheritance tax?
Many investors and savers will be wondering if there’s anything they can do to protect their ISAs from inheritance tax, especially as pensions will become liable for the levy from April 2027. We reveal the options available to ISA customers
By Ruth Emery
-
What is the average salary by age – and how do you compare?
Are you making more than your peers? We look at the average salary by age to see how much the typical Brit earns at different stages of their life
By Daniel Hilton
-
BP's 'long, painful decline' – and why next year could be even tougher
Opinion Long-suffering shareholders in oil giant BP have been pushing for change. It won’t come soon enough, says Matthew Lynn
By Matthew Lynn
-
Investment trusts tap the profits in exotic and obscure global markets
Opinion Peter Walls, manager of the Unicorn Mastertrust fund, highlights three investment trusts as he shares where he'd put his money
By Peter Walls
-
Falling revenues and mounting debt spell trouble for Jumia Technologies
Struggling African e-commerce platform Jumia Technologies looks headed for the exit, says Dr Matthew Partridge.
By Dr Matthew Partridge
-
Chemring Group: an explosive investment opportunity in defence
European states are raising their military spending, and Chemring Group looks well placed to profit
By Rupert Hargreaves
-
Next reports £1 billion in annual profits for the first time – what's next for the retailer?
Clothing retailer Next has become only the fourth member of its sector to surpass £1 billion in annual profits. What does this mean for the company's future?
By Dr Matthew Partridge
-
Best of British bargains: cash in on undervalued companies in the UK stock market
Opinion Michael Field, Chief Equity Market Strategist, EMEA, Morningstar, selects three attractive UK stocks where he'd put his money
By Michael Field
-
Building firm Keller presents low debt and ample scope for growth
Geotechnical contractor Keller, which supports vital global infrastructure, boasts rising profits and a cheap valuation
By Dr Mike Tubbs
-
PZ Cussons share price down 75% in last decade – why it's one to watch
Opinion Once-strong consumer-goods business PZ Cussons is out of favour with the market. That spells opportunity for investors, says Jamie Ward
By Jamie Ward