Oil was steady near $58 a barrel as an industry report pointed to a drop in U.S. crude stockpiles, adding to signs of easing supply.
Futures in New York have surged almost 12% over the past seven sessions to their highest level in more than a year as the market continues its recovery from the Covid-19 pandemic. The American Petroleum Institute reported crude inventories fell by 3.5 million barrels last week, according to people familiar.
Prompt timespreads for U.S. crude and global benchmark Brent have recently firmed in a bullish backwardation structure, signaling tightening supplies, and the oil market is now offering its biggest yield in about a year.
Oil’s rally has gathered momentum this year after a pledge from Saudi Arabia to deepen output cuts and as stockpiles in regions across the world including China are drained. There are still some concerns about near-term demand as countries continue to tackle the spreading virus and one technical indicator is signaling oil is overbought and due for a correction.
U.S. gasoline stockpiles, meanwhile, expanded by 4.81 million barrels last week, the API said. If confirmed by government data on Wednesday, it would be the biggest gain since April. The industry report also showed inventories of distillates — a category that includes diesel — declined.
– Bloomberg