Crude Oil Prices Hit New Highs as Cold Snap Supports Asian Demand By

© Reuters.

By Geoffrey Smith — Crude oil prices hit fresh nine-month highs again on Friday, as cold weather across much of the northern hemisphere – but particularly in Asia – kept prices well bid even after a rally that has seen oil gain over 40% since early November.

By 11:10 AM ET (1610 GMT) futures were up 1.7% at $49.17 a barrel, with some traders apparently keen on testing the $50 level before the end of the day. Bullishness about the year ahead has become steadily more entrenched this week, despite forecasts from the International Energy Agency and OPEC suggesting that improvements in demand will be modest until the middle of the year. 

futures, the global benchmark, were likewise up 1.5% at $49.06 a barrel.

U.S. were up 0.7% at $1.3980 a gallon. 

As such, the whole complex is trading at levels last seen immediately before the brief price war between Saudi Arabia and Russia in the spring. In part that’s due to heavy speculative buying over recent weeks: according to data from the Commodity Futures Trading Commission, net speculative long positions rose from 442,500 contracts in early November to over 517,000 contracts as of last week, and are now close to their highest levels in two years. The CFTC will update its numbers later Friday.

Saad Rahim, chief economist with Trafigura, one of the world’s largest oil trading houses, told Argus Media on Thursday that crude prices could hit $60 a barrel next year, as policy stimulus across the globe combines with the rollout of vaccines to rid people of their fear of travel.

The U.S. Food and Drug Administration is expected to give emergency use authorization to Moderna (NASDAQ:)’s Covid-19 vaccine in the course of the day, while the EU has confirmed that the distribution of the Pfizer/BioNTech vaccine will start before the year-end. 

Even so, analysts at Rystad Energy warn that air travel, the one demand component that is still languishing well below pre-pandemic levels, will only really start to recover when vaccination levels reach 50% or more.

Elsewhere Friday, Baker Hughes will round off the week with its weekly . The number of active U.S. oil rigs has risen smartly from a low of 172 in August to 258 as of last week, when the net addition of 12 new rigs was the biggest weekly increase since January. However, overall numbers are still well below half of pre-pandemic levels.

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