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By Bozorgmehr Sharafedin
SINGAPORE, Jan 29 (Reuters) - Oil prices edged up on Friday
but traded in a tight range as demand concerns caused by new
coronavirus variants and slow vaccine rollouts offset a cut in
Saudi Arabian oil supply and falling U.S. oil inventories.
Brent crude futures for March rose 60 cents, or
1.1%, to $56.13 a barrel by 1455 GMT.
The Brent March contract expires on Friday. The more active
April contract was up 69 cents, or 1.2%, at $55.79.
U.S. West Texas Intermediate (WTI) crude futures rose
70 cents, or 1.3%, to $53.04.
A Reuters poll showed that oil prices are expected to hover
around current levels for much of 2021 before a recovery gains
traction towards the end of the year.
"Restrictions on the demand side because of lockdowns are
countered by a sufficient reduction in supply ... preventing
prices from falling or rising to any significant extent," said
Commerzbank analyst Carsten Fritsch.
Saudi Arabia is set to cut output by 1 million barrels per
day (bpd) in February and March. Compliance with output curbs by
the Organization of the Petroleum Exporting Countries and
allies, together known as OPEC+, has improved in January.
OPEC oil output rose in January, a Reuters survey found,
after the producer group and allies agreed to an easing of
supply curbs.
However, the rise was still less than the amount agreed
under the deal, with an involuntary drop in Nigerian exports
limiting the increase.
A 9.9 million barrel drawdown in U.S. oil inventories last
week and forecasts for a small drop in U.S. oil production in
February provided price support, but market gains have been
capped by concern over stalled vaccine rollouts and the spread
of contagious new variants of the coronavirus.
Europe’s fight to secure COVID-19 vaccine supplies
intensified on Thursday when the European Union warned drug
companies such as AstraZeneca that it would use all
legal means or even block exports to ensure shots are delivered
as promised.
"The expected rebound in global oil demand depends a great
deal on the pace of COVID-19 vaccine distribution," said Stephen
Brennock of broker PVM.
"Any loss of momentum in vaccination programmes will
undermine the strength of the global oil demand recovery."
(Reporting by Bozorgmehr Sharafedin in London
Additional reporting by Roslan Khasawneh in Singapore and Sonali
Paul in Melbourne
Editing by David Goodman and Louise Heavens)
