Oil extended its rally for a ninth day on Wednesday, its longest winning streak in two years, supported by producer supply cuts and hopes that vaccine rollouts will drive a recovery in demand.
The American Petroleum Institute said on Tuesday crude inventories fell by 3.5 million barrels, versus expectations for a 985,000-barrel build. The Energy Information Administration’s official stocks report is due at 1530 GMT.
Brent crude was up $0.44, or 0.7%, at $61.53 by 1247 GMT after touching a 13-month high of $61.61 earlier in the session. US crude was up $0.37, or 0.6%, to $58.73, having touched $58.76, also a 13-month high.
“One can only wonder whether there’s further to go in this week’s rally,” said Stephen Brennock of broker PVM. “However, as things stand, oil has yet to lose its shine.”
Brent has now risen for nine sessions in a row, its longest sustained period of gains since December 2018 to January 2019. Some analysts say prices have moved too far ahead of the underlying fundamentals.
“The current price levels are healthier than the actual market and entirely reliant on supply cuts, as demand still needs to recover,” said Bjornar Tonhaugen of Rystad Energy.
Crude has jumped since November as governments kicked off vaccination drives for Covid-19 while putting in place large stimulus packages to boost economic activity, and the world’s top producers kept a lid on supply.
Top exporter Saudi Arabia is unilaterally reducing supply in February and March, supplementing cuts agreed by other members of the Organisation of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+.
Some analysts forecast supply will undershoot demand in 2021 as more people get vaccinated and start going away on trips and working in offices.