Brent oil hit $75 a barrel for the first time in more than two years amid signs of a rapidly tightening market and in a boon to cash strapped exporters like Nigeria.
Futures in London edged above that mark in early Asian trading after rising 1.9% in the previous session, the most in four weeks.
The market continues to firm in a bullish structure, with one timespread for West Texas Intermediate expanding to the widestbackwardation in seven years.
Genscape Inc. reported stockpiles at the key American storage hub of Cushing fell again last week from the lowest level since March 2020, according to people familiar.
Brent oil has rallied more than 40% this year as a strong rebound from the pandemic in the U.S., China and Europe underpins increasing fuel consumption, although a virus comeback in parts of Asia is a reminder that the recovery will be uneven.
The global crude benchmark may even advance to $100 a barrelnext year as travel demand rebounds, according to Bank of America Corp.
“Demand optimism is now well established and a tightening of the market is very much in the spotlight,” said Vandana Hari, the founder of Vanda Insights. “If there is a pause in this rally, it will likely come from the supply side.”
One bit of bearish news amid all the optimism is China’s crackdown on the nation’s private refiners.
A second batch of 2021 crude import quotas allocated to the independents was about 35% less than last year, which will crimp flows into a sector that accounts for around a quarter of Chinese processing capacity.
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