Oil prices hit an 11-month high on Thursday after Saudi Arabia decided to cut its output over the coming two months and after a report showing a more than forecast fall in U.S. crude inventories.
Saudi Arabia, the world’s biggest oil exporter, said it would voluntarily reduce 1 million barrels per day of production in February and March to counter the oversupply in the oil market.
Meanwhile, there are concerns that the new lockdown measures would weaken global fuel demand, amid insistence form large producer to boost their output.
In the U.S., the EIA weekly government report released on Wednesday showed a drop by 8 million barrels in the week to Jan. 1 to 485.5 million barrels, beating estimates of a 2.8 million-barrel decline.
Regarding sentiment, oil took advantage of the improvement in risk sentiment after the win of Democrats in Georgia’s Senate runoff election that granted Democrats full control over both Chambers.
The majority in both White House and Congress by Democrats should facilitate Joe Biden’s mission to implement his economic agenda, which encompasses higher fiscal spending.
Optimism about potential bigger U.S. fiscal stimulus managed to overshadow the concerns about chaotic protests by Trump supporters last night in Washington.
Trump supporters invaded the U.S. Capitol on Wednesday, sending it into lockdown, but Police took control and mentioned the certification of the election result has resumed.
Crude oil futures traded higher for a third consecutive session at $50.90 a barrel, the highest level since February 25, 2020, while Brent crude jumped to a high of $54.87 a barrel.
The dollar index managed to rebound from its lowest level since April 2018 after Fed minutes indicated consensus among officials regarding holding the current pace of asset purchases.