Oil rose for a fourth day – aided by a falling dollar and Middle East tensions — before OPEC+ meets to decide whether it can keep lifting output as a surging virus smothers the global energy demand recovery. Futures in New York jumped as much as 2.5% to approach $50 a barrel. A further decline in the dollar is boosting the appeal of commodities that are priced in the currency, while nervousness over the situation in the Middle East may also be playing a part in crude’s ascent. The USS Nimitz aircraft carrier will remain in the waters around the Arabian Sea following recent threats by Iran, U.S. Acting Secretary of Defense Chris Miller said in a statement.
OPEC+ returned 500,000 barrels a day to the market this month and meets on Monday to decide on production levels for February. The outlook for the first half is very mixed and there are still many downside risks to juggle, OPEC Secretary-General Mohammad Barkindo said at a meeting on Sunday.
The U.K. prime minister said tougher lockdown measures will likely be needed in England, while Japan is considering imposing another state of emergency. The oil demand situation is better in China, however, where a frigid winter and power shortages are prompting factories to rush to install diesel generators. A gauge of Chinese manufacturing strength for December missed estimates, while a similar Indian measure increased slightly from the previous month.
“With the dollar factoring in on the gain, it’s not just oil but funds are flowing into commodities across the board” and tensions between the U.S. and Iran are back in the headlines, said Vandana Hari, the founder of Vanda Insights in Singapore. “The OPEC+ decision could go either way — a rollover of cuts or a 500,000 barrels a day hike — but the bulls may take the latter in their stride.”