Oil hits 11-month high after fall in U.S. crude stocks
Oil hit an 11-month high on Wednesday, boosted by a draw in U.S. crude and gasoline stocks, which fuelled demand recovery hopes as OPEC+ has forecast that the market will be in deficit in 2021.
Brent crude futures were up 48 cents, or 0.8%, to $57.94 a barrel at 0839 GMT, their highest since late February 2020.
The contract’s “backwardation” structure, where oil for nearby delivery is more expensive than further forward, was near a one-year high at more than $2, indicating expectations of tighter supply.
U.S. West Texas Intermediate (WTI) crude futures climbed 34 cents, or 0.6%, to $55.10 a barrel. The benchmark hit a one-year high at $55.26 on Tuesday.
The market was also bolstered by news that Democrats in the U.S. Congress took the first steps toward advancing President Joe Biden’s proposed $1.9 trillion coronavirus aid plan without Republican support.
The API oil industry association reported U.S. crude oil inventories fell by 4.3 million barrels in the week to Jan. 29.[API/S]
Gasoline stocks fell by 240,000 barrels, defying analysts’ expectations for a build of 1.1 million barrels. Distillate inventories also fell.
U.S. government inventory data is due at 1530 GMT. [EIA/S]
Prices were also buoyed by the latest assessment by the Organization of the Petroleum Exporting Countries and allies that the oil market could be in deficit throughout this year, a document seen by Reuters on Tuesday showed.
“Underpinning the bullish sentiment are tightening fundamentals. Ahead of today’s ministerial meeting, OPEC+ hinted that global oil stockpiles will decline below the five-year average by June,” PVM analysts said.
The ministerial meeting will convene on Wednesday, although it is not expected to recommend any adjustments to oil output policy.
