Picture: REUTERS
Picture: REUTERS

Singapore — Oil prices rose in Asia on Wednesday after hitting their highest in about a year in the previous session, supported by an unexpected draw in US crude stockpiles and an oil cartel Opec, and its allied producers, including Russia (Opec+) estimate of a global oil market deficit in 2021.

Market sentiment was bolstered by news that Democrats in the US Congress took the first steps towards advancing President Joe Biden’s proposed $1.9-trillion coronavirus aid plan without Republican support.

US West Texas Intermediate (WTI) crude futures climbed 24c, or 0.4%, to $55.00 a barrel at 4.47am GMT, for a third consecutive day of gains. The benchmark hit a one-year high of $55.26 on Tuesday.

Brent crude futures rose 26c, or 0.5%, to $57.72 a barrel, for a fourth day of gains after hitting $58.05 on Tuesday, the highest since January last year.

Analysts said the market was buoyed by the latest assessment by Opec+, that oil stockpiles will decline to below a five-year average by June.

That showed the producers’ output cuts were succeeding in bringing the market back into balance.

“The strategy was very clear. Opec and allies set out to cut a deal that would normalise global excess inventory through 2021 — well, they’re on track,” said Lachlan Shaw, head of commodity research at National Australia Bank.

Opec+ expects output cuts will keep the market in deficit throughout this year, peaking at 2-million barrels a day in May, even though it revised down its outlook for demand growth, a document seen by Reuters on Tuesday showed.

A ministerial meeting will convene on Wednesday, though it is not expected to recommend any adjustments to oil output policy.

Further supporting the market, industry data after the market closed on Tuesday showed US crude and gasoline inventories fell unexpectedly.

The American Petroleum Institute reported US crude oil inventories fell by 4.3-million barrels in the week to January 29, compared with analysts’ expectations in a Reuters poll for a build of 446,000 barrels.

Petrol stocks fell by 240,000 barrels, defying analysts’ expectations for a build of 1.1-million barrels, while distillate inventories, which include heating oil and jet fuel, fell by 1.6-million barrels, a bigger draw than expected.

US government data is due at 3.30pm GMT from the Energy Information Administration.

Reuters

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