U.S. oil prices traded past $66 for the first time in nearly two years Friday as crude and commodity markets continued to extend gains following yesterday's production cuts agreement from OPEC and bets on a faster post-pandemic recovery.
The moves were supported by a stronger-than-expected reading of February employment growth, which the Bureau of Labor Statistics pegged at 379,000, and triggered extended gains for blue chip stocks such as Exxon Mobil (XOM) - Get Report, Chevron (CVX) - Get Report and Pioneer Natural Resources (PXD) - Get Report.
Goldman Sachs also boosted its near-term forecast for Brent crude prices, which are used as the global benchmark, and expects them to hit $80 a barrel by the third quarter of this year.
And with the U.S. vaccination rate now accelerating past 2 million per day -- or around 35 times higher than the current rate of new infections -- and the Senate plodding its way towards passing President Joe Biden's $1.9 trillion stimulus bill, investors are betting on a faster recovery that could both spur a sharper uptick in energy demand while potentially stoking further near-term inflation concerns.
OPEC members, along with Russia, agreed to rollover their current pact on production cuts until at least the end of April following yesterday's virtual meeting in Vienna, with Saudi Arabia also pledging to extend its own voluntary cuts, which are taking 1 million barrels of oil from the market each day, for another month.
"While OPEC+ clearly do see improving fundamentals for the oil market, they are still conscious of the fact that there is plenty of uncertainty around the demand outlook, and so do appear to be taking a more cautious approach," said ING's head of commodity strategy Warren Patterson.
"There is also an element where OPEC+ do not believe that US oil production will be able to respond to the higher price environment, at least not any time soon," he added.
WTI contracts for April delivery were marked $2.31 higher from their Thursday close at $66.14 per barrel, the highest since April 2019 and a move that extends the six-month gain to around 66%. Brent crude contracts for May delivery surged another $2.60 to $69.33 per barrel.
Exxon Mobil shares, meanwhile, were marked 2.3% higher at $60.10 each while its larger rival, Chevron, rose 3.15% to $107.80 each. Pioneer shares were also up 3.15% at $163.76 each.