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Oil extended gains from the highest settlement in almost 10 months after broader markets rallied and American crude stockpiles declined more than expected.
Futures in New York rose 0,5 percent to above US$48 a barrel. Crude inventories dropped by 3,14 million barrels last week, more than the median estimate in a Bloomberg survey.
Equity markets rallied and the dollar fell as optimism grew around a $900 billion US spending package, while Europe expedited the roll-out of a Covid-19 vaccine before Christmas.
Oil is up more than 30 percent since the end of October on optimism about a sustained recovery in demand as the world gets vaccinated, but the market is still facing a number of near-term hurdles including an OPEC+ supply hike next month.
The International Energy Agency warned this week that the crude glut left behind by the pandemic won’t clear until the end of 2021.
“It is not only hopes that the stimulus package will be approved in the US that are pushing prices up; US inventory data have also lent positive impetus,” said Commerzbank AG analyst Barbara Lambrecht.
The physical market, meanwhile, is robust.
India’s refineries are running at full tilt and Asian demand has driven the price of Russian, Middle Eastern and US barrels higher.
There are signs, however, of weakening consumption from some countries in the region including South Korea, as the coronavirus stages a comeback.
West Texas Intermediate for January delivery rose 0,5 percent to US$48,06 a barrel at 10:09am. London time
Brent for February settlement gained 0,5 percent to US$51,32.
The mixed outlook has weakened the front of Brent’s forward curve, which is now on the verge of a bearish contango structure.
The prompt timespread was still 3 cents a barrel in backwardation, meaning the first month was more expensive than later-dated ones.
That compares with 13 cents a week earlier. — Bloomberg.
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