Oil hit an 11-month high on Wednesday, bringing cheer to Nigeria and other oil dependent economies languishing under ballooning debt and collapsing government revenues.
Crude oil was boosted by a draw in US crude and petrol stocks, which fueled demand recovery hopes as oil cartel Opec and its allied producers, including Russia (Opec+) has forecast that the market will be in deficit in 2021.
Brent crude futures were up 48c, or 0.8%, to $57.94 a barrel at 8.39am GMT, their highest since late February 2020.
The contract’s backwardation structure, in which oil for near delivery is more expensive than further forward, was near a one-year high at more than $2, indicating expectations of tighter supply.
US West Texas Intermediate (WTI) crude futures climbed 34c, or 0.6%, to $55.10 a barrel. The benchmark hit a one-year high at $55.26 on Tuesday.
The market was also bolstered by news that Democrats in the US Congress took the first steps towards advancing President Joe Biden’s proposed $1.9-trillion coronavirus aid plan without Republican support.
The American Petroleum Institute (API) reported US crude oil inventories fell by 4.3-million barrels in the week to January 29.
Petrol stocks fell by 240,000 barrels, defying analysts’ expectations for a build of 1.1-million barrels. Distillate inventories also fell.
US government inventory data is due at 3.30pm GMT.
Prices were also buoyed by the latest assessment by Opec+ that the oil market could be in deficit throughout 2021, according to a document seen on Tuesday.
“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 ministerial meeting will convene on Wednesday, though it is not expected to recommend any adjustments to oil output policy.
