Oil Rises to Its Highest Level in 13 Months Thanks to Production Cuts And Hopes of Recovery in Demand

Oil prices rose on Tuesday, February 9th, to their highest in 13 months, as energy markets received support from major producers cutting supplies and optimism about a recovery in fuel demand.

Brent crude futures for April delivery were 50 cents, or 0.8%, at $ 61.06 a barrel. US West Texas Intermediate crude for March delivery reached $ 58.37 a barrel, up 40 cents, or 0.7%.

Brent and WTI hit their highest levels since January 2020 earlier in the session. And the prices of the contracts for the month of the nearest maturity of the two highs for the seventh session today, Tuesday, the longest streak of gains since January 2019.

Supplies are scarce and global markets are balanced thanks to additional supply cuts by Saudi Arabia, the largest crude exporter, in February and March, as well as cuts by producers of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.

Investors are also pinning their hopes on a recovery in oil demand when the impact of Covid-19 vaccines takes effect, while the weak dollar has contributed to rising in commodity prices. But analysts warn that the rapid rise in oil prices has led the two futures contracts into overbought territory.

Investors are looking forward to the weekly US oil inventory data due for release later in the week.

A Reuters poll on Monday showed that US crude and gasoline stocks increased last week, while distillate stocks were expected to decline.