Singapore — Oil prices extended gains on Thursday after the Opec+ alliance of major producers stuck to a reduced output policy, and as crude stockpiles in the US fell to their lowest levels since March 2020.
Brent crude futures gained 47 US cents, or 0.8%, to $58.93 a barrel, by 3.17am GMT, having earlier hit their highest level since February 21 2020 in the wake of the Opec+ decision.
US West Texas Intermediate (WTI) crude futures climbed 49c, or 0.9%, to $56.18 a barrel after reaching its highest settlement level in a year on Wednesday.
“Crude prices have been rising higher now that Opec+ has convinced the energy market that they are determined in accelerating market rebalancing without delay,” said Edward Moya, senior market analyst at Oanda.
Opec and allies, known as Opec+, extended its oil output policy at a meeting on Wednesday, a sign that producers are happy that their deep supply cuts are draining inventories despite an uncertain outlook for a recovery in demand as the coronavirus pandemic lingers.
A document seen by Reuters on Tuesday showed Opec expects the output cuts will keep the market in deficit throughout 2021, even though the group cut its demand forecast.
Also supporting prices, US crude oil stockpiles fell by 994,000 barrels last week to 475.7-million barrels, their lowest level since March, the US Energy Information Administration said on Wednesday. Analysts in a Reuters poll had forecast a 446,000-barrel rise.
Continued progress in rolling out Covid-19 vaccines is also an important driver of oil prices, Moya said.
“The world now has several effective Covid vaccines that should really force energy traders to upgrade their return to pre-pandemic behaviour forecasts,” he said.
The market was also bolstered by news that Democrats in the US Congress took the first steps towards advancing President Joe Biden’s proposed $1.9-trillion coronavirus aid plan.
In a separate development, the US has filed a lawsuit to seize a cargo of oil it says came from Iran rather than Iraq, as stated on the bill of lading, and contravenes US terrorism regulations.