Crude oil futures started the week steady to higher in mid-morning trade in Asia Feb. 7, riding on the bullish momentum from the last seven weeks as supply concerns remained at the fore.
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At 10:20 am Singapore time (0216 GMT), the ICE April Brent futures contract was up 23 cents/b (0.21%) from the previous close at $93.52/b, while the NYMEX March light sweet crude contract slipped 14 cents/b (0.15%) at $92.18/b.
Analysts noted that crude prices remained on track to retake $100/b, a level last hit by ICE Brent on Sept. 9, 2014. A deep freeze spreading across the US late in the week ended Feb. 4 was the latest disruption to oil markets.
"Crude oil futures extended gains as sentiment is bolstered by rising consumption amid ongoing supply constraint," ANZ Research analysts said in a Feb. 7 note.
"Demand for transportation fuels continues to rise as restrictions from the recent surge in COVID-19 are wound back. In the US, diesel demand has risen to its highest level for this time of the year in at least three decades, while stockpiles on the US east coast are at their lowest level since April 2020," they added.
In a note late last week, OANDA's senior market analyst Edward Moya said: "Crude prices seem to have a one-way ticket to $100/b oil."
Crude prices have risen for the last seven straight weeks, adding up to 30% in value over this period.
Market watchers have looked to Iranian oil and the return of sanctions waivers as a potential relief to the current tight supply situation. However, analysts said a US-Iran deal for restarting nuclear controls and removing major oil sanctions remained far from certain, despite the recent US move to grant some sanctions relief to Tehran's civil nuclear program.
Paul Sheldon, S&P Global Platts Analytics senior geopolitical adviser said Feb. 6 that the talks could easily continue for months.
"The US continues to voice urgency and the need for a diplomatic solution within weeks, but we suspect far more patience exists than suggested by public comments," he said.
The US oil rig count has climbed steadily in a sign of an impending hike in production, though there is usually a lag time of several months before oil is pumped from the ground.
The US oil rig count rose by 2 to 497 in the week ended Feb. 4, latest Baker Hughes data showed. US oil production, however, fell by 100,000 b/d to 11.5 million b/d in the week ended Jan. 28, latest data from the US Energy Information Administration showed.
US oil executives have said that US crude production may grow by as much as 900,000 b/d this year.