Oil prices touched multimonth highs on Monday on expectations OPEC and allied producers may cap output at current levels in February and on hopes that coronavirus vaccines may help curb the spread of the virus and drive a strong economic rebound in the new year.
Prices rose in line with broader financial markets with Brent crude futures reaching 53.33 a barrel, the highest since March 2020. U.S. West Texas Intermediate WTI crude touched 49.83 a barrel, the highest since February 2020.
March Brent crude futures were at 52.41 a barrel, up 61 cents, or 1.2, by 0944 GMT and February WTI crude futures rose 35 cents, or 0.7, to 48.87 a barrel.
Price action today suggests that the market is assuming that OPEC keeps the level of cuts unchanged for the upcoming month, said ING commodities strategist Warren Patterson.
OPEC and allies, a group known as OPEC, will meet on Monday. Most OPEC experts voiced opposition to increasing oil output from February when they met on Sunday, three OPEC sources told Reuters on Monday.
In December, OPEC decided to increase production by 0.5 million barrels per day bpd from January as part of a 2 million bpd gradual rise this year but some members have questioned the need for a further boost due to spreading coronavirus infections.
The start of the new year is presenting challenges to the OPEC group, as the balance of risks to oil demand recovery has changed, BNP Paribas analyst Harry Tchilinguirian said.
The OPEC producer group may have to…