Oil prices continue to recover as the global market tightens and demand improves.
Oil prices are now near their highest level in more than a year after rallying in recent days.
Futures in New York traded near $58 U.S. a barrel on Monday after climbing 11% over the past six sessions as prices extended a robust recovery from the depths of the COVID-19 pandemic.
Oil is expected to move higher in coming weeks as refiners increase processing to meet higher product demand amid tighter crude supplies. While the rally has gained momentum, one technical indicator is signaling oil is overbought and due for a correction, and top traders Vitol SA and Gunvor Group Ltd. have expressed caution about the current surge in prices.
Oil’s rise since the end of October has been underpinned by COVID-19 vaccine breakthroughs and a more recent pledge by Saudi Arabia to deepen output cuts. Stockpiles across regions including China have started to drain, indicating shrinking supplies.
The Organization of Petroleum Exporting Countries (OPEC) and its allies have pledged to keep draining a virus-driven surplus and there are expectations that the global economy will recover this year, raising forecasts for stronger oil demand. Investor holdings of West Texas Intermediate futures have soared to their highest level since 2018.
China increased its monthly intake of American crude by 136% in December to 20.8 million barrels a day, making it the top buyer of U.S. crude, according to U.S. Census Bureau data.
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