Oil surged to the highest in more than a year as
the market looks ahead toward an accelerating decline in global inventories and
a comeback in demand.
Futures in New York climbed 2.5% Wednesday, rising to the highest since
January 2020. Energy Information Administration data showed crude output fell
to 9.7 million barrels a day last week amid an unprecedented polar blast, tying
for the low reached last summer when Hurricane Laura sent production
supplies are declining with stockpiles at a major European storage hub falling
to their lowest level since September. Key players in the oil market have been
talking up the rising prices in the coming months, with some even floating the
prospect of $100 crude in the next year or two as the global economy recovers
from the pandemic.
Still, the report showed crude inventories climbed by 1.29 million
barrels last week as the cold weather shut most Texas refineries, while
stockpiles at a key U.S. storage hub rose for the first time in six weeks.
Despite the U.S. build, confidence that a meaningful demand rebound will
accompany widening vaccination availability by this summer has supported
underlying market structure for global benchmark Brent futures remains in
backwardation, where nearer contracts trade at a premium to following months,
indicating tightening supplies as OPEC+ maintains production curbs. Market
movements in the coming weeks are likely to be driven by the legacy of the U.S.
cold weather, an upcoming OPEC+ meeting and the ongoing reflation trade across