On Wednesday, February 3, after updating ten-month highs a day earlier, oil futures continued the trend. The cause for optimism was OPEC+’s prediction that the oil market would remain in deficit throughout 2021, with the effect that the accumulated reserves in oil storage facilities will begin to decrease. In comparison, figures from the American Petroleum Institute, which revealed a substantial decline in crude oil stocks in the United States, offered justification for the price of ‘black gold.’ The anticipation of a $1.9 trillion stimulus package in the United States is an extra optimistic factor.
On Nymex, the March WTI contract for crude oil futures rose 1.7 percent to $55.69, while April-due Brent also advanced 1.7 percent to $58.46. Since the beginning of the year, oil prices have now risen about 15 percent. On Wednesday, the Energy Department reported a drop in domestic oil inventories of 1.1 million barrels to 475.7 million barrels for the week ended January 29, the lowest since March 2020.
The released forecasts for OPEC+ for the current year were favorably viewed by investors. Thus, the organization’s experts expect the oil market to stay in deficit for all 12 months of 2021 in the baseline case, and to hit its high of 2 million barrels per day in May. As a result, oil supplies in the world will be decreased by 406 million barrels by the end of the year. At the same time, OPEC+ cut its estimate for demand growth from 5.9 million barrels per day to 5.6 million barrels per day in 2021. The actions of the parties to the Production Constraints Agreement will, however, help to offset the declining market.
The figures from the American Petroleum Institute (API) released Wednesday were also worth remembering. U.S. crude oil inventories fell by 4.261 million barrels in the week ended January 29, versus a fall of 5.272 million barrels a week ago, although a rise of 0.367 million barrels was forecast. The decline in stocks is most likely attributed to a rise in oil demand due to heavy snowfalls in the north-east of the United States. Official figures from the EIA agency on the stocks of oil and refined products in the United States will be published today.
Additional oil price support is provided by the anticipation of the eventual implementation in the United States of a proposed $1.9 trillion stimulus package. The Senate voted 50-49 on Tuesday to launch a discussion on the 2021 budget, taking into account the additional expenses associated with the coronavirus.
Silver resumed its ascent on Wednesday after being heckled by moves induced by specific speculators, with the March futures contract listed on the Comex climbing 1.6 percent to $26.88 an ounce. After falling 1.6 percent the previous day, gold advanced much more timidly, with the April maturity futures contract on the yellow metal gaining 0.1 percent to $1,835.10 an ounce on Wednesday.