Crude oil futures secured further gains on Tuesday, with both global benchmark Brent and US West Texas Intermediate (WTI) climbing to the highest levels since January 2020.
Prices for both contracts touched peak levels for the last 13 months during early trading on Tuesday before giving up some of the gains. Brent crude futures for April and WTI futures for March were still up around 0.3 percent as of 09.35 GMT, trading at $60.77 per barrel and $58.11 per barrel respectively.
Oil prices have recently started roaring back after a tumultuous 2020, when Covid-19 crippled demand for the commodity around the world. On Monday, Brent and WTI prices reached pre-pandemic levels. If crude prices close Tuesday’s session with gains, it will mark the longest winning streak since January 2019.
The positive sentiment is underpinned by the recovery of some major economies, like China, as well as optimism that coronavirus vaccines will further boost demand. At the same time, global oil exporters are still withholding millions of barrels of crude under the deal between OPEC and its allies led by Russia, together known as OPEC+. In addition to the deal, top global oil producer Saudi Arabia voluntarily cut supply by another 1 million barrels per day in February and March.
However, some analysts warn that the price for the commodity may be advancing too fast.
“That Brent crude and WTI have now run so far ahead of their respective support region in such a short amount of time is a warning sign,” OANDA’s Jeffrey Halley said. “When it comes, the correction could well be quite brutal, unless oil now contents itself to consolidate at these price levels for the next few days.”
Later on Tuesday, the US Energy Information Administration (EIA) will present its monthly report, providing near-term outlook on energy markets. Another closely-watched report on oil inventories data will be released on Wednesday.
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