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TOKYO (Reuters) – Oil prices edged up on Monday after a weak start, retaining the last three months of gains, though patchy coronavirus vaccine deployments, new infections and the discovery of new variants keep a lid on the prices.
Brent crude futures rose 10 cents to $ 55.14 a barrel at 2:33 a.m. GMT, while US West Texas Intermediate (WTI) gained 1 cent to $ 52.21. Both benchmarks gained almost 8% in January.
Oil prices have been boosted by vaccination programs launched in hard-hit countries and production cuts from large producers like Saudi Arabia. But the euphoria over a possible end of the pandemic has been undermined by the slowness of vaccinations and the rise of new variants of the coronavirus.
Yet, with more vaccines succeeding in trials and infections declining in some areas, the demand for oil and fuels will likely increase as more of the world’s population gets vaccinated against COVID-19.
“Demand will recover across the board, driven by Asia-Pacific and North America,” FitchSolutions said in a research note.
“Europe and Latin America will lag behind, largely reflecting a more moderate economic recovery in key markets in these regions,” he said.
Oil prices are expected to stay around current levels for most of this year before a recovery gains ground towards the end of the year, according to a Reuters poll on Friday evening.
U.S. oil and gas drillers are bracing for a pickup in demand and as rising prices make new wells profitable again, adding rigs for a sixth straight month in January.
U.S. production is up and exceeded 11 million barrels per day in November for the first time since April, according to the Energy Information Administration.
Reporting by Aaron Sheldrick; Editing by Tom Hogue
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