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WTI Crude Rises Above $60 Again, Natural Gas Demonstrates Losses

February 22, 2021 at 19:01 by Vladimir Vyun

Crude oil prices rallied today after pausing their advance last week. The West Texas Intermediate grade of crude managed to rise above the $60 level yet again. Some analysts predict that crude may reach the $70 mark rather soon. Natural gas, on the other hand, demonstrated huge losses. That is probably because weather in the United States was much milder than in the previous week when extreme colds led to supply disruptions. Yet forecasters predict that colds may return in March, which can translate into higher prices for natural gas.

As for why crude was rising, specialists provided several explanations. One of them was the weakness of the US dollar. With hopes for a $1.9 trillion fiscal stimulus and the outlook for persisting ultra-loose monetary policy from the Federal Reserve, fundamentals seemed to be against the greenback. That was helpful to commodities priced in the US currency.

Another reason for elevated oil prices was supply disruption caused by last week’s cold blast. While oil companies have been trying to resume production, it will take a long time before the output will be able to return to the previous levels. Frozen pipes, power outages, and difficult conditions preventing workers to get to fields and equipment will make it hard to restart production.

On the negative side, it looks like Saudi Arabia and Russia are again in disagreement over the OPEC+ oil production curbs. While Saudi Arabia wants to be cautious, maintaining output cuts and allow prices to continue to rise, perhaps reaching $80, Russia wants to ramp up production. The members of the production cut agreement will meet on March 4 to discuss by how much to ease the curbs, if at all.

Futures for delivery of WTI crude oil in March climbed as much as $2.01 (3.39%) to $61.25 per barrel as of 19:00 GMT on NYMEX today. Brent crude for delivery in April jumped by $2 (3.18%) to $64.91 per barrel on ICE. March natural gas sank by $0.15 (4.86%) to $2.92 per million British thermal units.

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