US Crude Tops $60 on Saudi Arabia Attack, Stimulus Hopes

US crude oil futures topped $60 for the first time in more than a year as fresh Middle East tensions and a blast of winter weather in the southern US sent energy prices soaring to kick off the holiday-shortened trading week. Investors also poured into crude over hopes for additional US stimulus and easing of the coronavirus pandemic. Could US crude’s next stop be $65?

March West Texas Intermediate (WTI) crude oil futures surged $1.16, or 1.95%, to $60.63 per barrel at 09:49 GMT on Monday on the New York Mercantile Exchange. WTI contracts are coming off a weekly gain of 4.6%, and US crude is already up more than 25% year-to-date.

Brent, the international benchmark for oil prices, advanced more than 1% to start the trading week. April Brent crude futures tacked on $0.85, or 1.36%, to $63.28 a barrel on London’s ICE Futures exchange. Brent prices climbed 4.3% last week, bringing their 2021 gains to around 22%.

Commodities are enjoying a considerable rally so far this year, extending it from 2020 when most commodity assets recorded an increase. For now, crude prices are finding support on renewed Middle East tensions and winter weather.

Oil kicked off its recent push on Friday when the Iran-backed Houthis announced that they attacked an international airport and an airbase in Saudi Arabia using explosive-laden drones. A Saudi-led coalition in Yemen later confirmed that it intercepted and destroyed a separate drone that had been fired by the Houthis. The latest events came soon after President Joe Biden ordered the State Department to remove the terrorist designation for the Houthis, a move that could diminish the strengthened alliance between Washington and Riyadh.

Market analysts contend that this could prompt the Kingdom to reverse its position to curtail output to help offset rising production in Kazakhstan, Libya, and Russia. The Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the group OPEC+ have instituted a series of production cuts, allowing prices to recover. The next meeting or two should be riveting for energy markets.

Many parts of the US are facing significant winter weather activity, with snowstorms heading as far south as Texas. The state declared an emergency proclamation on Monday as Old Man Winter dumped half a foot of snow in Austin, causing power disruptions. Arctic-like temperatures are also blanketing the East and Midwest, leading to greater energy consumption.

Traders are turning their attention to President Biden’s push for his $1.9 trillion coronavirus stimulus and relief package. This could inject liquidity into the broader economy, something that would add to the economic gains from the easing of lockdowns and restrictions across the country.

Is this the start of a “supercycle” for the commodities market? All the numbers point to a boom in grains, energy, and metals.

In other energy markets, March natural gas futures gained $0.094, or 3.23%, to $3.006 per million British thermal units (btu). March gasoline futures jumped $0.0199, or 1.18%, to $1.7124 per gallon. March heating oil futures picked up $0.0247, or 1.39%, to $1.7961 a gallon.

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