Oil rose for a fourth day after OPEC and its allies pledged to rapidly clear the global surplus built up during the Covid-19 pandemic. Futures in New York climbed above $56 a barrel after closing at the highest level in more than a year. OPEC+ ministers led by Saudi Arabia and Russia “stressed the importance of accelerating market re-balancing without delay” amid “uncertain” prospects for oil demand, according to a communique.

The alliance’s efforts appears to be working despite a still tenuous recovery in demand: U.S. crude stockpiles shrunk to the smallest in more than 10 months, government figures showed Wednesday, while Chinese inventories are at the lowest in almost a year, data provider Kayrros said. West Texas Intermediate is up around 8% this week, while Brent is within sight of $60 a barrel.

Oil is rising again after pausing for a couple of weeks

Despite the downtrend in stockpiles, a recovery in fuel consumption remains shaky as lockdown measures limit mobility and concerns grow over the spread of several Covid-19 mutations. Saudi Arabia’s commitment to cutting output, however, has reshaped the oil futures curve into a more bullish structure that suggests investors are comfortable with the supply-demand balance.

“It’s likely the trend in the first two quarters will be positive, and stronger prices may see the return of more U.S. and Iran barrels,” said Suvro Sarkar, an energy analyst at DBS Bank Ltd. The recent volatility in stocks may also drive more investment into commodities, he said.
PRICES
  • WTI for March delivery rose 1% to $56.22 a barrel on the New York Mercantile Exchange as of 7:40 a.m. in London
  • Brent for April settlement climbed 0.9% to $58.97 on the ICE Futures Europe exchange after rising 1.7% in the previous session