Oil prices rose more than 2% to near their highest levels in about a year on Wednesday, after government data showed U.S. crude stockpiles fell to their lowest since March, while OPEC+ maintained its supply cut agreement.
U.S. West Texas Intermediate (WTI) crude futures rose $1.45, or 2.7%, to $56.21 a barrel, their highest since January 2020. Brent crude futures rose $1.37, or 2.4%, to $58.83 a barrel by 11:05 a.m. EST (1605 GMT), their highest since last February.
Both benchmarks’ backwardation, where contracts for near-term delivery are more expensive than later supplies, were at their highest in just over a year at around $2.30, indicating expectations of tighter supply.
U.S. crude oil stockpiles fell last week to 475.7 million barrels, the Energy Information Administration said on Wednesday, their lowest since March. Refiner utilization rates, meanwhile, rose by 0.6 percentage points.
“Refineries are back in business, which is supportive for crude,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “On net, this is a supportive report.”
The market has been bolstered by deep supply cuts from the Organization of the Petroleum Exporting Countries and allies, which on Wednesday, maintained their oil output policy.
The day before, a document seen by Reuters showed that OPEC+ expects the oil market to be in deficit throughout 2021, peaking at 2 million barrels per day in May.
“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.
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.