Oil prices rose on Jan. 6 to their highest since February 2020 after Saudi Arabia agreed to reduce output more than expected in a meeting with allied producers, while industry figures showed U.S. crude stockpiles were down last week.
Brent crude rose as much as 0.9% to $54.09/bbl, the highest since Feb. 26, 2020. It was at $53.82/bbl at 0757 GMT after jumping 4.9% on Jan. 5.
WTI futures in the U.S. climbed as much as 0.6% to $50.24/bbl, also the highest since Feb. 26, before slipping to $49.96. The contract on Jan. 5 closed up 4.6%.
Saudi Arabia, the world's biggest oil exporter, agreed on Jan. 5 to make additional, voluntary oil output cuts of 1 million bbl/d in February and March, after a meeting with OPEC and other major producers that form the group known as OPEC+.
The reductions agreed by Saudi Arabia were included in a deal to persuade other producers in the OPEC+ group to hold output steady.
With coronavirus infections spreading rapidly in many parts of the world producers are trying to support prices as demand takes a hit from new lockdowns being put in place.
"Despite this bullish supply agreement, we believe Saudi's decision likely reflects signs of weakening demand as lockdowns return," analysts from Goldman Sachs said in a note, although the investment bank maintained its year-end 2021 forecast for Brent of $65/bbl.
OPEC member Iran's seizure of a South Korean tanker in the Gulf on Jan. 4 also continued to support prices. Tehran denied it was holding the ship and its crew hostage after seizing the tanker while pushing for Seoul to release $7 billion of funds frozen under U.S. sanctions.
Meanwhile U.S. crude oil inventories dropped by 1.7 million barrels in the week to Jan. 1 to 491.3 million barrels, data from industry group the American Petroleum Institute showed late on Jan. 5. That exceed analysts' expectations in a Reuters poll for a decline of 1.3 million barrels.
U.S. natural gas futures rose on Dec. 31 and were on track for their best year since 2016, helped by forecasts for slightly colder weather than previously expected and record LNG exports.
Brutal cold puts gas production from Appalachia at risk.
Sabine was the first big LNG export facility to enter service in the Lower 48. When the company shipped its first cargo in February 2016, the U.S. was not exporting any LNG.