Oil in New York extended its recent rally to a new 10-month high as the dollar edged lower, increasing the appeal of commodities priced in the currency.
Earlier, futures rose above $53 a barrel to the highest since February 2020. Prices have been climbing since the beginning of the year after promises of unilateral crude output cuts from Saudi Arabia starting next month.
Those gains followed a strong end to 2020 with Covid-19 vaccine breakthroughs buoying
the demand outlook, while Opec and its allies agreed to keep curbing their output. Recent
Democrat victories in US elections have also spurred hopes of economic stimulus, while commodity index re-balancing was expected to buoy prices.
“The market has both fundamental and financial upward momentum, thanks to extra voluntary Saudi production cuts and a weak dollar outlook with Fed holding its present policy steady,” said Harry Tchilinguirian, oil strategist at BNP Paribas SA.
West Texas Intermediate for February delivery rose 66 cents to $52.91 a barrel at 1:33 pm London time.
There are signs that prices could be starting to get overheated though. WTI is now
trading around its 200-week moving average, which is a signal “it may soon top out,” Commerzbank AG analysts said.
Both the US benchmark and Brent have been trading in technically overbought territory too in recent days.
With prices climbing higher, a “big chunk” of US shale production is now profitable, International Energy Agency Executive Director Fatih Birol said.
WTI prices for 2022 are trading close to $49 a barrel on Tuesday, their highest level since February.
A fuel primarily used for cooking surpassed gasoline as India’s second most popular oil product after a boost from a government buying program, cold weather and lockdowns due to Covid-19.
ED&F Man Holdings Ltd agreed to sell a part of its brokerage unit as the commodities trader sheds assets to focus on its core business.
Carlos Slim and his family have accumulated stakes worth $230 million in oil refiner PBF Energy Inc. and pipeline operator PBF Logistics LP, continuing to snap up stock even as the shares have slumped.