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Brent oil hits year-high above $60

Slowing infection rates, the rollout of vaccines and optimism over Joe Biden's stimulus plan are providing strong support to global markets - ALAIN JOCARD / ©AFP
Slowing infection rates, the rollout of vaccines and optimism over Joe Biden's stimulus plan are providing strong support to global markets - ALAIN JOCARD / ©AFP

(AFP)

The benchmark oil contract Brent North Sea rose above $60 per barrel Monday to hit the highest level since the coronavirus pandemic began to spread globally almost a year ago.

Oil prices have recovered owing to OPEC and its allies cutting production after the coronavirus pandemic slashed demand, according to analysts.

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“It is worth reminding oneself that OPEC+ is the single most important reason for why the oil price reached $60” on Monday, noted Bjarne Schieldrop, chief commodities analyst at SEB Research. 

“It is because of large cuts by OPEC+… since May,” he added.

Crude and other assets are winning support also from the prospect of a $1.9-trillion US stimulus package. 

European and Asian stock markets also climbed Monday, while the dollar rose against its main rivals.

Adding to the upbeat mood is data showing new Covid infection rates, with last week seeing the lowest level since October, while governments begin to get to grips with inoculation programmes. 

Brent crude hit $60.27 per barrel on Monday, the first time it has exceeded $60 since February 2020.

After lockdowns began to spread in March, oil prices dropped off a cliff, with US oil contract WTI even briefly turning negative.

And despite production cuts, oil supplies remain high.

“Global oil demand is still hurt badly by the global pandemic,” added Schieldrop.

Recovery in part relies on US lawmakers approving President Joe Biden’s huge stimulus package that should help the jobs market.

Figures last week showed the US economy created less than half the number of jobs expected last month, which analysts said reinforced the need for a new, big spending bill.

Treasury Secretary Janet Yellen on Sunday warned that the US job market was “stalling” and might not recover for years without support.

But she told CNN that if the spending package was passed, “we would get back to full employment next year”.

Despite the weak jobs reading, all three main indices on Wall Street ended on a positive note Friday, with the Nasdaq and S&P 500 clocking up new records.

“Markets are continuing last week’s bullish momentum, with Friday’s jobs report providing a fresh reminder of the need to push a major stimulus package across the line,” said Joshua Mahony, senior market analyst at IG trading group.

– Key figures around 1115 GMT –

Brent North Sea crude: UP 1.3 percent at $60.13 per barrel

West Texas Intermediate: UP 1.3 percent at $57.56 per barrel

London – FTSE 100: UP 0.9 percent at 6,544.33 points

Frankfurt – DAX 30: UP 0.2 percent at 14,083.13

Paris – CAC 40: UP 0.6 percent at 5,693.03

EURO STOXX 50: UP 0.4 percent at 3,669.40

Tokyo – Nikkei 225: UP 2.1 percent at 29,388.50 (close)

Hong Kong – Hang Seng: UP 0.1 percent at 29,319.47 (close)

Shanghai – Composite: UP 1.0 percent at 3,532.45 (close)

New York – Dow: UP 0.3 percent at 31,148.24 (close)

Euro/dollar: DOWN at $1.1988 from $1.2048 at 2200 GMT on Friday

Dollar/yen: UP at 105.67 yen from 105.38 yen 

Pound/dollar: DOWN at $1.3693 from $1.3735

Euro/pound: DOWN at 87.54 pence from 87.71 pence

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