Oil prices edged up to their highest in 13 months on Tuesday as supply cuts by major producers and optimism over fuel demand recovery support energy markets.
Brent crude futures for April gained 48 cents, or 0.8%, to $61.04 a barrel by 0443 GMT. U.S. West Texas Intermediate crude (WTI) for March was at $58.42 a barrel, up 45 cents, or 0.8%.
Both Brent and WTI are at their highest since January 2020. Front-month prices for both contracts are up for the seventh session on Tuesday, the longest win streak since January 2019.
Additional supply reductions by top exporter Saudi Arabia in February and March, on top of cuts by producers in the Organization of the Petroleum Exporting Countries and their allies, are tightening supplies and balancing global markets.
Investors are also pinning hopes on oil demand recovery when COVID-19 vaccines take effect. A weak dollar has also helped shored up prices of commodities.
“Progress on U.S. stimulus and optimism around the roll-out and effect of vaccines across the remainder of 2021 and a slightly weaker USD help the view (for a recovery) albeit there was mixed news on the impact of the current vaccines formulated on the emerging South African variant,” Stephen Innes, chief global markets strategist at brokerage Axi.
He cautioned, however, that both Brent and WTI are in overbought territory on technical charts.
“While I remain a bit cautious at current levels, the medium and longer-term outlook for demand is healthy, and one can understand a willingness to look through some of the near-term uncertainty that remains for oil,” he said.
Investors are looking ahead to the US weekly oil inventories data due later in the week.
US crude and gasoline stockpiles likely rose last week, while distillate stocks were seen down, a preliminary Reuters poll showed on Monday.