Oil prices edged higher on Thursday after the OPEC+ alliance of major producers stuck to a reduced output policy at a meeting on Wednesday, and as crude stockpiles in the United States fell to their lowest levels since March last year.
Brent crude futures gained 4 cents, or 0.1%, to $58.50 a barrel, by 0120 GMT. On Wednesday, Brent prices hit their highest since Feb. 21, 2020.
U.S. West Texas Intermediate (WTI) crude futures climbed 13 cents, or 0.2%, to $55.82 a barrel after reaching its highest settlement level in a year on Wednesday.
“Crude prices have been rising higher now that OPEC+ has convinced the energy market that they are determined in accelerating market re-balancing without delay,” said Edward Moya, senior market analyst at OANDA.
The Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, extended its current oil output policy at a meeting on Wednesday, a sign that producers are happy that their deep supply cuts are draining inventories despite an uncertain outlook for a recovery in demand as the coronavirus pandemic lingers.
Oil has rallied from historic lows hit last year, thanks to record OPEC+ output cuts that the group is starting to unwind.
Also supporting prices, U.S. crude oil stockpiles fell by 994,000 barrels last week to 475.7 million barrels, their lowest since March, the U.S. Energy Information Administration said on Wednesday. Analysts in a Reuters poll had forecast a 446,000-barrel rise.
While refinery utilisation rates rose by 0.6 percentage points to 82.3% of capacity, U.S. gasoline stocks rose by 4.5 million barrels, EIA said.
Continued progress in rolling out COVID-19 vaccines is also an important driver of oil prices, OANDA’s Moya said.
“The world now has several effective COVID vaccines that should really force energy traders to upgrade their return to pre-pandemic behaviour forecasts,” he said.