Oil rose toward $60 a barrel in London as supplies continue to tighten while the demand outlook improves with the rollout of coronavirus vaccines.
Futures in London climbed for a sixth day, also aided by a weaker dollar, as they close in on a level last reached in February 2020 before Covid upended global energy markets.
The Organization of Petroleum Exporting Countries (Opec) and its allies have pledged to keep draining a virus-driven surplus as inventories from China to the US fall.
The recent rally comes on the back of a surge in interest in commodities, with investors looking to profit from an expected recovery in the global economy.
Holdings of futures for US oil have surged to their highest since 2018. Expectations for stronger oil demand are also buoying prices, with more people getting the Covid-19 vaccines.
However, oil at $60 a barrel will bring more production back online and dampen any further rises, according to top trading firm Gunvor Group.
“Besides soft factors such as increased demand from investors in view of the pronounced price buoyancy, rising stock markets and economic optimism, the physical market is also looking increasingly tight,” said Eugen Weinberg, head of commodities research at Commerzbank.