Oil climbed to the highest level in over a year as tightening global supplies and signs of strength in physical markets aided crude’s virus-recovery rally.
Futures rose 2.3 percent in New York to the highest in over a year, rising back above $55 a barrel in post-settlement trading after an industry group reported another decline in U.S. stockpiles.
Crude has been climbing steadily since late last year as coronavirus vaccines and producers’ supply curbs boost expectations of a tighter market. OPEC and its allies expect to drain an oil surplus by the middle of the year.
Meanwhile, there continues to be signs of strength in the market for physical barrels of oil, with Royal Dutch Shell Plc bidding for more cargoes of benchmark-grade North Sea crude on an S&G Global Platts pricing window.
The bids come a day after the oil major staged the heaviest buying by a single company since at least 2008.
Last month’s pledge by Saudi Arabian Energy Minister Prince Abdulaziz bin Salman to slash production by a further 1 million barrels a day has helped global oil markets.
On Wednesday, a panel that oversees OPEC’s strategy — the Joint Ministerial Monitoring Committee — will convene online to assess the outlook. The JMMC is unlikely to recommend new policies, which will instead be tackled at the next full OPEC+ meeting in early March.
U.S. crude stockpiles fell by over 4 million barrels last week, the industry-funded American Petroleum Institute (API) was said to report ahead of a U.S. government tally.
The API report also showed a decline in refined product inventories and a drop in supplies at the nation’s largest storage hub in Cushing, Oklahoma.