Oil hovers near 11-month highs, sustained by Saudi output cuts pledge

Oil prices were on a higher edge on Friday and were hovering near the 11-month high. The reason for this could be the Saudi Arabia’s pledge to make voluntary cuts to its output continued to buoy the mood in the market though worries over slower fuel demand capped gains.

There was a hike of 2 cents in Brent crude to $54.40 per carrel by 0122 GMT. The same closed slightly higher yesterday. It must be noted that the same touched levels of $54.90 on Thursday, which is the highest since February 2020.

It is expected that the Oil Markets will continue the bullish rally towards February considering the surprise announcement from Saudi Arabia for cutting down the production. As per the announcement, Saudi Arabia will cut down the output by an additional 1 million barrels per day in February and March.

There was a rise in the US fuel inventories last week. The Gasoline stocks showed an increase of 4.5 million barrels, which is the biggest increase since April 2020, as announced by the Energy Information Administration.

The broadly upbeat mood in Global equities led by Wall Street, which achieved a record high on Thursday, provided support to oil prices as the markets bet a new Democrat controlled government which would lead to a heavy borrowing and spending support the economic recovery of United States.

‍