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* Brent hits highest since March 2020
* WTI hits highest since Feb 2020
* OPEC+ set to discuss Feb production level
* Most OPEC+ experts oppose Feb output increase -sources
* Iran seizes South Korean-flagged tanker
(Updates prices, adds detail)
By Bozorgmehr Sharafedin
LONDON, Jan 4 (Reuters) - Oil prices touched multi-month
highs on Monday on expectations OPEC and allied producers will
hold off on increasing output in February and on hopes that
vaccines may curb the spread of the novel coronavirus and drive
an economic rebound.
Benchmark Brent crude futures reached $53.33 a
barrel, their highest since March 2020, as prices rose in line
with broader financial markets.
U.S. West Texas Intermediate (WTI) crude touched
$49.83 a barrel, its highest since February 2020.
"Price action today suggests that the market is assuming
that OPEC+ keeps the level of cuts unchanged for the upcoming
month," said ING commodities strategist Warren Patterson.
Prices later trimmed gains, with March Brent crude futures
at $52.23 a barrel, up 43 cents or 0.8%, as of 1501 GMT.
February WTI crude futures were up 20 cents, or 0.4%, to $48.72.
"The likely extension of mobility restrictions across
several European countries might have been a trigger causing oil
prices to erase earlier gains," UBS analyst Giovanni Staunovo
said.
OPEC and allies, a group known as OPEC+, were meeting on
Monday. Most OPEC+ officials voiced opposition to increasing oil
output from February when they met on Sunday, three OPEC+
sources told Reuters on Monday.
OPEC+ increased output by 500,000 barrels per day (bpd) this
month but some members have questioned the need to increase more
from February due to an upsurge in the COVID-19 pandemic.
"The start of the new year is presenting challenges to the
OPEC+ group, as the balance of risks to oil demand recovery has
changed," BNP Paribas analyst Harry Tchilinguirian said.
Kuwait's oil minister said he expected a gradual recovery in
oil demand, particularly in the second half of 2021, as many
countries start to distribute coronavirus vaccines.
Britain began vaccinating its population with the COVID-19
shot developed by Oxford University and AstraZeneca on
Monday.
Tensions in the Middle East also supported oil prices after
Iran's Revolutionary Guards seized a South Korean-flagged tanker
and its crew were detained and accused of polluting the Gulf
with chemicals.
Oil also drew strength from a weaker dollar and strong
manufacturing activities in Asia and Europe. U.S. factory
activity data is expected later on Monday.
(Reporting by Bozorgmehr Sharafedin in London, additional
reporting by Florence Tan in Singapore; Editing by Barbara Lewis
and Jason Neely)
