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Crude oil futures started the first trading session of 2021 rallying higher, as the market looks to today’s OPEC+ meeting for the next direction.

What you should know: At the time of writing this report, West Texas Intermediate futures traded at $48.85 a barrel thereby printing a gain of 0.68% and Brent crude futures gained 0.69% to trade at $51.80 per barrel.

READ: Oil prices hit $50/barrel for the first time since March

With the oil market just re-opening after shutting down for the New Year’s Day holiday, the next important driver is likely to be the OPEC+ group meeting scheduled to hold today, where ministers will decide on production quotas for next month.

In a note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, spoke on the prevailing market sentiments supporting oil prices for the near term:

For Context Read: Oil prices drop amid curb on air travels

“Following broader market sentiment out of the gates, oil prices have risen. Still, gains could be limited as politicians get handcuffed into tighter mobility restrictions as countries worldwide look to re-impose lockdown. And with contagious mutations now ravaging the EU, several major oil-consuming countries are expected to extend current lockdowns.

“Members of the OPEC group of oil producers and their partners will meet via videoconference on Monday to decide on production levels for February.

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“Although prices have been stabilizing higher due to the vaccine optimism, the market has not turned the corner just yet on Covid-19 uncertainty to warrant anything other than OPEC drip-feeding barrels back to the needs monthly.”

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What to expect: While it is increasingly clear that 2021 global demand for energy will likely be above supply if the oil cartel group can hold on together, limiting downside risk in oil, near-term catalysts due to the new contagious COVID-19 mutations are more likely to be negative than positive for short term oil prices.

Source: Nairametrics

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