Oil spikes to 12-month high on output cuts, demand revival hopes

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Crude oil touched its 12-month highs as hopes for economic revival were boosted by output cuts from OPEC member countries, Reuters reported. The rally edged up to as high as $60 per barrel in European trading on Friday.

New orders for U.S.-made goods surged much more than expected fueling the continued strength in manufacturing. President Joe Biden’s moves to enact a $1,9 trillion coronavirus aid bill also gained momentum on Friday.

“The conditions still remain supportive for oil markets,” Jeffrey Halley, an analyst at brokerage OANDA told Reuters. “Oil should find plenty of willing buyers on any material dip.”

Brent is on track to rise more than 6% this week. The last time it traded at $60 a barrel, the pandemic had yet to take hold, economies were open and people were free to travel, meaning demand for gasoline, diesel and jet fuel was much higher. The rollout of Covid-19 vaccines, however, is supporting hopes of lockdowns being eased, boosting fuel demand. But even demand optimists such as OPEC do not expect oil consumption to return to pre-pandemic levels until 2022.

Oil also gained support from supply curbs by producers. OPEC and its allies, collectively known as OPEC+, stuck to their supply tightening policy at. Record OPEC+ cuts have helped to lift prices from historic lows last year.

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