Expectations for tighter supply and a decline in U.S. oil stocks offset concerns about rising coronavirus cases globally, with oil hitting an 11-month high just below $ 57 on Tuesday.
Saudi Arabia plans to reduce production by an additional 1 million barrels a day in February and March to avoid overstocks. Saudi Arabia is ensuring lower supply to the market through additional voluntary production cuts, and this is part of an OPEC-led agreement where most producers will keep production stable in February.
Brent crude was 79 cents, or 1.4%, higher at $56.45 a barrel by 1304 GMT and earlier hit $56.75, the highest since last February. West Texas Intermediate (WTI) gained 89 cents, or 1.7%, to $53.14.
US crude oil stocks are expected to decline for the fifth consecutive week.
Oil also rose in anticipation of a drop in US crude inventories. Analysts expect crude oil inventories to decline to 2.7 million barrels to be the fifth consecutive week.
In addition, the growing expectation of economic recovery in the United States also supports the oil prices. The new President Biden will take office on January 20 and has already pledged “trillions” for extra incentive against the pandemic.
Concerns about increased demand due to rising coronavirus cases worldwide are limiting earnings.
Chinese authorities imposed new restrictions on areas surrounding Beijing on Tuesday, and Japan will expand its state of emergency beyond Tokyo.