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  • WTI crossed above the $53.00 level for the first time since February 2020 early during the European trading session.
  • Crude oil markets continue to benefit from the ongoing mass vaccination push as well as the voluntary Saudi output cut.

WTI crossed above the $53.00 level for the first time since February 2020 early during the European trading session, before dropping back to the $52.50 by the start of US trading hours. In recent trade, however, the bulls have taken the American benchmark for sweet light crude back to the $53.00 level and are eying a test of daily highs at $53.22 and a continued grind onwards and upwards towards the February 2020 high at $54.45.

On the day, WTI currently trades with gains of around 80 cents or 1.5%, buoyed in fitting with a broadly positive bias to risk appetite; while US stocks have slipped into the red in recent trade and European equities closed a little subdued, USD is broadly weaker and most other commodities are making decent upwards strides. 

Crude oil market fundamentals remain upbeat

Crude oil markets continue to benefit from the ongoing mass vaccination push in major developed markets that has already seen roughly 4% of the adult UK population and 3% of the adult US population receive their first jabs. Expectations for a demand rebound once the Northern Hemisphere makes it through the tough winter months are high and growing. Meanwhile, the 1M barrel per day voluntary cut from the Saudi Arabians (announced last week) in February and March is contributing to expectations that crude oil markets will be undersupplied later in the year. Indeed, UBS expects the oil market to be undersupplied by 1.5M barrels per day in 2021 and Goldman Sachs upgraded their forecast for Brent, seeing the oil grade rally to $65 per barrel by mid-2021.

Given the bright outlook for the crude oil market this year, participants continue to shrug off bad news regarding the outlook very crude oil demand over the very near-term future; the spread of the Covid-19 pandemic continues to worsen in Europe, the US, while even China is locking cities down again, though has not experienced another large scale outbreak yet. Meanwhile, the Saudi Arabians are likely to be angered by the latest OPEC+ compliance numbers, which dropped to 75% in December, amongst the lowest levels of compliance the cartel has seen since its new output cut pact was agreed back in May 2020.

WTI key levels