Oil prices were steady on Friday as the drawdown in US oil inventories is set to relieve the supply glut, supported by Saudi Arabia’s impending oil output cut of 1 million barrels per day (bpd) from February onwards.
International benchmark Brent crude was trading at $55.11 per barrel at 0616 GMT for a 0.02% rise after closing Thursday at $55.10 a barrel.
American benchmark West Texas Intermediate (WTI) was at $52.13 per barrel at the same time for a 0.40% decrease after it ended the previous session at $52.34 a barrel.
Saudi Arabia, the de-facto leader of the Organization of Petroleum Exporting Countries (OPEC) and the main driver of OPEC+ production cuts, is due to voluntarily reduce its production in February and March by 1 million bpd.
After Saudi Arabia’s voluntary reduction, the group’s production cut will now reach 8.125 million bpd in February and 8.05 million bpd in March, meaning that OPEC+ will reduce its output in February by 925,000 bpd and 850,000 bpd in March relative to output rates in January.
However, before this output fall in February, the drawdown in US commercial crude oil inventories helped the supply glut and balanced markets. According to data released by the country’s Energy Information Administration (EIA) on Thursday, US commercial crude oil inventories fell to the lowest level since March by 9.9 million barrels, or 2%, to 476.7 million barrels, relative to the market expectation of a build of 603,000 barrels.
Nonetheless, the spread of the virus variant worldwide followed up by accompanying restrictions and lockdowns capped price gains by limiting mobility and raising fears over weak demand.
Spain confirmed on Thursday that the South African variant of the coronavirus was detected in the country just as the Health Ministry reported a drop in new infections.