By Sonali Paul
MELBOURNE, Jan 29 (Reuters) - Oil prices were mixed on
Friday as a pending supply cut by Saudi Arabia and lower U.S.
oil stocks helped counter risks of slowing fuel demand due to
stalled vaccine rollouts and contagious new coronavirus strains.
U.S. West Texas Intermediate (WTI) crude CLc1 futures
slipped 3 cents to $52.31 a barrel at 0151 GMT, after falling
1.0% on Thursday.
Brent crude LCOc1 futures for March rose 14 cents, or
0.3%, to $55.67 a barrel, after falling 0.5% in the previous
session.
The Brent March contract expires on Friday. The more active
April contract LCOc2 rose 11 cents, or 0.2%, to $55.21.
Supply cuts are supporting the market. Saudi Arabia is set
to cut output by 1 million barrels per day (bpd) in February and
March, and compliance with output curbs by the Organization of
the Petroleum Exporting Countries and allies, together called
OPEC+, has improved in January. The Saudi cut effectively means OPEC+ supply cuts will rise
from 7.2 million bpd in January to 8.125 million bpd in
February, Commonwealth Bank analyst Vivek Dhar said.
"The OPEC+ production strategy is still working and hopes
are high we will get J&J's vaccine approved sometime next week,"
OANDA analyst Edward Moya said in a note.
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 are also helping support the market. EIA/S
However market gains have been capped by worries about
stalled vaccine rollouts and the spread of contagious new
variants of the coronavirus.
Analysts pointed to news of the South African variant
reaching the United States, concerns about a flood of new cases
in Israel despite its success in vaccinating its population, and
vaccine distribution issues in Europe and the United States as
discouraging. "Oil investors' worries ... around vaccines availability and
rollouts, which could lead to protracted lockdowns in Europe,
are likely the two most damaging feedback loop culprits on the
continually revolving carousel of adverse risks for the oil
market," said Axi global strategist Stephen Innes.