NEW YORK: Oil prices extended their rally for a seventh session on Tuesday to hit fresh 13-month highs, supported by supply cuts and optimism over a recovery in fuel demand.
The oil market was also supported by the dollar falling to a one-week low. A weaker dollar makes greenback-denominated commodities more attractive to holders of other currencies.
Brent was up 24 cents, or 0.8%, to $$61.06 a barrel by 1:03 p.m. EST (1803 GMT).
US West Texas Intermediate crude (WTI) for March was at $58.30 a barrel, up 33 cents or 0.6%.
Both benchmarks hit their highest since January 2020 earlier in the session.
“With Brent over $60, it’s been great psychologically for the (energy) complex and everyone is feeling bullish about stronger demand and global inventories in further decline,” said John Kilduff, partner at Again Capital LLC in New York.
The markets have rallied since November as investors are pinning hopes on demand recovery as COVID-19 vaccines take effect and as governments and central banks deploy huge stimulus packages to boost economic activity.
Signalling tightening supplies in the world’s top oil producer, the US government on Tuesday lowered its outlook for crude oil production in 2021 to 11.02 million barrels per day from 11.1 million bpd previously forecast. Also, US crude inventories have fallen to the their lowest since March, before the pandemic crushed the oil markets. Analysts in a Reuters poll, however, forecast a 1 million-barrel build last week.
Weekly US oil inventory data is due from industry group the American Petroleum Institute at 4:30 p.m. EST (2130 GMT), followed by government data on Wednesday. Top exporter Saudi Arabia is curbing supply in February and March, on top of cuts by fellow producers in the Organization of the Petroleum Exporting Countries and their allies, prompting forecasts of a supply deficit this year.
“The Saudis’ intent to eliminate a global supply surplus appears to be on track and capable of boosting crude prices further,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
Libya’s output has fallen to 1.04 million barrels per day (bpd) from 1.3 million bpd late last year due to an ongoing strike by Petroleum Facilities Guards, a Libyan oil source said on Monday.
Tehran and Washington remain deadlocked over a resolution of sanctions on Iran that has kept supply from the OPEC member off the market.—Reuters
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