LONDON (Reuters) – Oil prices scored their seventh straight session of gains for both benchmark contracts on Tuesday, hitting their highest since late January 2020, as supply cuts by major producers and optimism over a recovery in fuel demand support energy markets.
Brent crude futures for April gained 41 cents, or 0.7%, to $60.97 a barrel by 1000 GMT.
U.S. West Texas Intermediate crude (WTI) for March was at $58.25 a barrel, up 28 cents, or 0.5%.
“We attribute the latest price surge first and foremost to financial market factors such as the considerable investor optimism and the again weaker U.S. dollar, and expect prices to correct,” Commerzbank analysts said in a note.
The dollar was down 0.4% against a basket of currencies, making dollar-priced commodities more attractive to holders of other currencies.
Top exporter Saudi Arabia is squeezing supply in February and March, on top of cuts by producers in the Organization of the Petroleum Exporting Countries and their allies, prompting forecasts of a supply deficit this year.
Additionally, Libyan oil production has fallen to 1.04 million barrels per day (bpd) from 1.3 million bpd late last year due to an ongoing strike by the Petroleum Facilities Guards, a Libyan oil source said on Monday.
Signalling no swift return of Iranian barrels into the market, Tehran and Washington appeared to be in deadlock over a resolution of sanctions on the OPEC member.
Investors are also pinning hopes on an oil demand recovery when COVID-19 vaccines take effect, while a weak dollar has helped to shore up the price of commodities.
Investors are looking ahead to the U.S. weekly oil inventories data due later on Tuesday.
U.S. crude and gasoline stockpiles probably rose last week, while distillate stocks were seen down, a preliminary Reuters poll showed on Monday.