Oil futures climbed on Thursday, looking to extend their streak of gains, with prices holding ground at their highest in a year.
Prices remained underpinned by expectations for the Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, to continue keeping a lid on output, as the global economy recovers from the COVID-19 pandemic.
Gains for crude on Wednesday came after data from the Energy Information Administration showed a smaller-than-expected fall in U.S. inventories, along with a rise in gasoline supplies.
OPEC+ also made no changes to output curbs at a monthly ministerial committee meeting a day ago, but in a statement said its “optimistic for a year of recovery” in 2021.
It also acknowledged Saudi Arabia’s “significant additional voluntary supply adjustment” that took effect on Feb. 1 and will run through March. In January, the Saudis pledged to unilaterally cut their own output by 1 million barrels a day to offset higher production from Russia and Kazakhstan.
Oil demand is rising and “OPEC restraint, as well as struggling U.S. oil production, is causing global inventories to tighten,” said Phil Flynn, senior market analyst at The Price Futures Group, in a daily report. “So much so that the world is headed towards a substantial supply deficit in the next year, as we continue the oil demand vaccine-related recovery pace. ”
West Texas Intermediate crude for March delivery CL.1, +0.47% CLH21, +0.47% was up 18 cents, or 0.3%, to $55.87 a barrel on the New York Mercantile Exchange.
April Brent crude BRN00, +0.24% BRNJ21, +0.24%, the global benchmark, added 11 cents, or 0.2%, at $58.57 a barrel on ICE Futures Europe, after trading as high as $59.04.
WTI posted gains in each of the previous three sessions, ending Wednesday at its highest since January of last year, while Brent rose in each of the last four consecutive sessions, after closing Wednesday at its highest since Feb. 21, 2020.
Also on Nymex, petroleum products edged lower, with March gasoline RBH21, -0.32% down 0.4% at $1.6421 a gallon and March heating oil HOH21, -0.12% losing 0.2% to $1.6876 a gallon.
In a monthly report Wednesday, the Energy Information Administration said it may take years for energy demand to recovery from the pandemic.
The government agency said it expects total U.S. energy consumption to return to 2019 levels by 2029, but if the nation sees low economic growth, energy consumption may not return to pre-COVID levels until 2050.
Natural-gas futures, meanwhile, moved higher after the EIA reported on Thursday that domestic supplies of natural gas declined by 192 billion cubic feet for the week ended Jan. 29.
On average, the data were expected to show a drop of 195 billion cubic feet for the week, according to analysts polled by S&P Global Platts.
March natural gas NGH21, +1.40% rose 1% to $2.818 per million British thermal units.
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