On Tuesday, oil prices rose to their highest in 13 months as supply cuts by major producers, and optimism about fuel demand recovery supported energy markets.
For April, Brent crude futures gained 48 cents, or 0.8 per cent, by 0443 GMT, to US$61.04 a barrel. For March, U.S. West Texas Intermediate crude (WTI) was at US$58.42 a barrel, up 45 cents, or 0.8 per cent.
As of January 2020, both Brent and WTI are at their highest. For the seventh session on Tuesday, the longest win streak since January 2019, both contracts’ front-month prices are up.
In addition to cuts by producers in the Organization of Petroleum Exporting Countries and their allies, additional supply reductions by top exporter Saudi Arabia in February and March tighten supplies and balance global markets.
As COVID-19 vaccines take effect, investors are also pinning hopes on oil demand recovery. A weak dollar has also helped shore up commodity prices as well.
Reuters reported Stephen Innes, chief global markets strategist at brokerage Axi said progress on U.S. stimulus and optimism around the remaining 2021 roll-out and impact of vaccines and a slightly weaker USD help the view for a recovery. However, there was mixed news on the impact on the emerging South African variant of the current vaccines developed.
He cautioned, however, that on technical charts, both Brent and WTI are in overbought territory.
Innes added the medium and longer-term outlook for demand is healthy. However, he remains a bit wary at current levels, and one can understand a willingness to look through some of the near-term volatility that remains for oil.
Investors are looking forward to details on the U.S. weekly oil inventories due later in the week. U.S. stocks of crude and gasoline likely rose last week, while stocks of distillates were seen down, a preliminary Reuters poll on Monday showed.