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WTI Crude Oil Bullish as Fed’s Dovishness, Tighter Supply in US Support

Posted Thursday, February 25, 2021 by
Arslan Butt • 1 min read

WTI crude oil is trading bullish for a fourth consecutive session, touching the highest levels seen in almost one year, supported by expectations for continued dovishness by the Fed and tightening of crude output in the US following the deep freeze. At the time of writing, WTI crude oil is trading at around $63.70 per barrel.

Crude oil prices have been making gains over recent remarks by the Fed Chairman Jerome Powell that reveal the central bank’s intention to continue with monetary easing and low interest rates for a longer period of time. This has boosted the market sentiment, driving up interest for riskier instruments even as the safe haven US dollar weakens, further supporting bullishness in oil.

Meanwhile, the EIA estimates that the unexpected wave of cold weather across Southern US drove crude production in the country down by over 10% during the past week. Despite weather conditions improving, oil companies across Texas could take some more time to resume operations, keeping crude supply tight in the coming sessions.

Oil traders are likely to turn their attention towards OPEC and its allies as they are due to meet next week to discuss the possibility of easing supply cuts. Saudi Arabia had previously agreed to deepen supply cuts by an additional 1 million bpd through February and March, but with the economic outlook improving, leading oil producing nations could consider increasing crude production soon.

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