© Reuters. FILE PHOTO: General view of Phillips 66's oil tanks and Bayway refinery in Linden
By Yuka Obayashi
TOKYO (Reuters) – Oil prices held near the 11-month high on Friday and were on their way to a strong weekly gain as Saudi Arabia's promise to cut production continued to fuel market sentiment.
was up 13 cents, or 0.2%, to $ 54.51 a barrel by 0531 GMT. It hit $ 54.90 on Thursday, its highest level since February.
The US West Texas Intermediate (WTI) gained 14 cents, or 0.3%, to $ 50.97. The contract closed 0.4% on Thursday after hitting its highest level since February at $ 51.28.
Both benchmarks are on track to gain around 5% this week.
"Saudi's decision to voluntarily cut production has continued to offer support," said Hiroyuki Kikukawa, general manager research at Nissan (OTC 🙂 Securities.
"Strong global stocks, backed by excessive liquidity, also led to re-buying of oil," he added, but cautioned that oil and equity markets could see a correction once their rallies do not match the current level of fuel demand and reflect the global economy.
Earlier this week, Saudi Arabia, the world's largest oil exporter, announced it would cut production by another 1 million barrels per day (bpd) in February and March.
On Thursday, seven loads of raw materials from the North Sea were bought and sold in the trading window operated by Platts.
UBS raised its forecast for Brent to $ 60 a barrel by mid-year after Saudi Arabia unilaterally cut and expected a strong rebound in demand in the second quarter as coronavirus vaccine rollout revived the trip.
Meanwhile, Asian stocks rose to record highs on Friday, hitting a three-decade high as investors moved beyond mounting coronavirus and political turmoil cases in the US to focus on hopes for an economic recovery later in the year.
"With Saudi Arabia's surprising promise to cut production, the oil markets are expected to remain optimistic in February," said Kazuhiko Saito, chief analyst at commodity broker Fujitomi Co.
"However, concerns about slower demand for gasoline and other fuels in the US and other parts of the world due to more extensive restrictions to contain the spread of the COVID-19 pandemic may limit profits," he added.
The raging pandemic claimed the highest death toll ever in the US, killing more than 4,000 people in a single day, while China reported the largest increase in daily cases in more than five months, and Japan may expand the state of emergency beyond the Tokyo area. (nT9N2IO00M)
U.S. fuel inventories rose last week and gasoline inventories rose 4.5 million barrels. This was the largest increase since April, the Energy Information Administration said on Wednesday.
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