Speculators have been selling oil over the past two weeks as prices continue higher and the appetite for profit-taking increases.
Oil soared past fiscal breakeven prices for the Middle East’s four biggest producers after OPEC+ kept output largely unchanged and an attack on a highly protected Saudi Arabian oil facility.
Oil prices rose early on Friday, adding to big gains overnight after OPEC and its allies agreed to not increase supply in April as they await a more solid recovery in demand from the coronavirus pandemic.
Oil plunged as the dollar pared losses ahead of a key OPEC+ meeting scheduled this week that may return more supply back to a fast-tightening market.
Oil prices hit its highest in a year on Friday, closing in on $60 a barrel, supported by economic revival hopes and supply curbs by producer group OPEC and its allies.
OPEC+ group’s compliance with the oil production cuts fell to 75 percent in December 2020—one of the lowest levels since the pact was enacted in May 2020, tanker tracking firm Petro-Logistics said on Tuesday.
Oil prices are ripe for a correction in coming weeks if speculator-driven rallies are not backed by stronger fuel demand soon.
Oil steadied in Asia after surging to a 10-month high on Saudi Arabia’s pledge to cut an extra 1 million barrels a day of crude output in February and March as a rampant coronavirus leads to more lockdowns.
Stating that the export of 2.3 million barrels is possible, Minister of Oil Bijan Zanganeh said that Iran does not need permission to return to oil markets.
OPEC+ managed to seal a compromise deal over its oil production policy early next year, presenting a united front of a unanimous decision after days of disagreements.