15.02.202113:07 Forex Analysis & Reviews: Oil prices soared to record highs for the first time in a year

The price of oil rose by about 5% last week. Today, the bullish rally in the energy market continues, as a result of which, the price of black gold rose to new record levels for the first time in more than a year. The price of April futures for the North Sea Brent crude oil rose 1.75% to $63.20 per barrel. March WTI futures are trading 2.15% higher, near $60.56 per barrel

The driver of the growth of oil prices today was the news from the Middle East. The Saudi-led alliance, which is fighting in Yemen, has announced the interception of an explosive-laden drone fired by the Houthi group. This escalation of the conflict threatens to disrupt the transportation of oil and briefly increases oil prices.

Also, refineries in the United States are increasing the volume of black gold processing. The refineries decided to increase their volumes, taking into account the expected stimulus measures and the lifting of some quarantine restrictions, which, as experts predict, should ensure economic recovery and, accordingly, significantly increase oil consumption. Thus, the demand for this energy carrier has jumped sharply.

In general, we can say that the coordinated actions of the OPEC+ member countries, which, according to the previously adopted agreement, reduce the production of black gold this month (and will continue to do so next month) by 1.425 million barrels per day, are extremely beneficial for oil buyers. The decision of Saudi Arabia regarding this issue is important, which unilaterally cut its oil production in February and March by 1 million barrels a day.

The next meeting of the members of the energy alliance will take place on March 3-4, where the OPEC+ countries will determine the volume of oil production for the next period. Analysts believe that no changes or additions to the existing agreements will be made. However, the mere mention of the readiness to do even more to maintain equilibrium in the hydrocarbon market may well send black gold quotes to new record levels.

At the same time, it is worth recognizing that oil sellers can also hope for support. And all because countries that are not members of OPEC (including US shale companies) may well decide to increase oil production and thereby significantly expand their market share. Many OPEC+ member countries are currently in a difficult financial situation. Thus, an additional increase in oil production at current prices may well be almost the only source of increasing budget revenues. Given this, market participants should not rush to open new "long" positions yet.