Oil prices reached their highest levels in a year on Friday amid optimism of economic growth in the United States and a commitment by major global producers to restrain the supply of crude.
Brent crude futures (BZ=F) hit a high of $59.41 (£43,46), a peak not seen since 20 February last year. Brent is on track to gain around 6% this week and is currently up 0.78% to $59.48.
US West Texas Intermediate (WTI) crude futures (CL=F) were up 0.5%, to $56.52 a barrel, after touching a high of $56.84, its highest since 22 January last year. The benchmark contract is on track for a weekly rise of 8%.
Vandana Hari, energy analyst at Vanda Insights, told Reuters: “Rising confidence in an upturn in economic and oil demand recovery around the corner is a major impetus for crude.
“Right now, the concurrent tightening of supply due to the additional Saudi cuts is adding to the tailwinds. Brent may be well on its way to the $60 milestone.”
Oil prices had been making gains already earlier in the week amid a resurgence in confidence in wider financial markets.
Just days ago, the Organisation of Petroleum Exporting Countries and their allies (OPEC+) announced “high compliance” among member states with agreements to limit supply to force up prices.
A committee of member countries’ representatives had held a virtual meeting on Wednesday, and gave no signals of a looming let-up in the cartel’s supply cuts.
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An OPEC statement said countries had held down production by a total of 2.1 billion barrels since April 2020, when the market suffered an historic collapse and futures prices even briefly turned negative.
“The committee welcomed the positive performance of participating countries,” it said. “Participants pledged to achieve full conformity and make up for previous compensation short-falls, and stressed the importance of accelerating market rebalancing without delay.”
A document seen by Reuters on Tuesday showed that OPEC expects output cuts to keep the market in deficit throughout 2021, even though the group reduced its demand forecast.
Government data also showed on Wednesday that US crude oil stockpiles last week unexpectedly fell to 475.7 million barrels, their lowest level since March.
The industry-funded American Petroleum Institute report also showed a decline in refined product inventories and a drop in supplies at the nation’s largest storage hub in Cushing, Oklahoma.
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