Oil prices extended gains on Monday, February 15, retracing to new YTD highs as Brent traded up 1% to $62.8/bbl, and WTI rose 0.3% to $60.17/bbl.
Yesterday’s rally was driven by an unexpected polar vortex in the United States as well as frigid weather in a number of European countries, coupled with escalation of the local conflict in Yemen, which, under certain circumstances, could evolve into an international conflict, at least between the Yemen’s Houthi rebels and Saudi Arabia, and at worst into a conflict involving other countries, such as Iran, Israel and even the United States. The situation in Yemen, as well as the joint coordination of efforts within the framework of OPEC+, was discussed during telephone calls on Monday between Russian President Vladimir Putin and Saudi Crown Prince Mohammad bin Salman.
Oil prices continued their ascent on Tuesday morning, with Brent up another 0.3%, again attempting to test the $63/bbl mark, while WTI, after opening to the upside, slipped and is currently off 0.1%. As regards our Brent price forecast, today we expect to see a broad range of $62.8-64/bbl.