London — Oil extended its rally for a ninth day on Wednesday, supported by producer supply cuts and hopes that vaccine rollouts will drive a recovery in demand.
The American Petroleum Institute (API) said on Tuesday that crude inventories fell by 3.5-million barrels, compared to expectations for a 985,000-barrel build. The Energy Information Administration’s (EIA) offfcial stocks report is due at 3.30 GMT.
Brent crude was up by 28c at $61.37 by 9.33am GMT after touching a 13-month high of $61.49 earlier in the session. US crude was up 21c to $58.57.
“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 and some analysts say a pullback may be on the cards.
“There is no doubt that oil prices have gone too far and too fast, which means a retracement is certainly due,” said Naeem Aslam, chief market analyst at Avatrade.
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 oil cartel Opec and their allies (Opec+).
Some analysts forecast there will be a supply deficit in 2021 as more people get vaccinated and start going away on trips and working in offices, potentially boosting demand.