On Wednesday both benchmark oil contracts hovered near their highest levels in about a year, boosted by a drawdown in gasoline stocks and U.S. crude that added to demand recovery hopes fueled by OPEC+’s forecast of a deficit in the market this year.
Brent crude futures were up 91 cents, or 1.6%, at $58.37 a barrel at 1442 GMT (9:42 a.m. EST), their highest in about 11 months. The contract’s “backwardation” structure, where oil for nearby delivery is more expensive than further forward, was at its highest in just over a year at around $2.30, indicating expectations of tighter supply.
U.S. West Texas Intermediate (WTI) crude futures climbed 90 cents, or 1.6%, to $55.66 a barrel, having hit a one-year high at $55.85 a barrel earlier on Wednesday. The market was also bolstered by news that Democrats in the U.S. Congress took the first steps toward advancing President Joe Biden’s proposed $1.9 trillion coronavirus aid plan without Republican support.
The API oil industry association reported U.S. crude oil inventories fell by 4.3 million barrels in the week to Jan. 29. Gasoline stocks fell by 240,000 barrels, defying analysts’ expectations for a build of 1.1 million barrels. Distillate inventories also fell.
Prices were also buoyed by the latest assessment by the Organization of the Petroleum Exporting Countries and allies that the oil market could be in deficit throughout this year, a document seen by Reuters on Tuesday showed.
“Underpinning the bullish sentiment are tightening fundamentals. Ahead of today’s ministerial meeting, OPEC+ hinted that global oil stockpiles will decline below the five-year average by June,” PVM analysts said.