Oil set for strongest gain in decades as market tightens

Bloomberg

Oil markets opened the week higher and were heading for the biggest gain in at least 30 years as robust demand outpaced fresh supply.
The global crude benchmark rises 1.3%, paring earlier gains, but remains on track for a 17% gain this month. West Texas Intermediate futures traded above $87 a barrel.
Traders were greeted on Monday with a familiar set of drivers, from the weather to stockpiles. Low temperatures in the US have been boosting demand for fuels, as Boston reported a daily snow record and New York’s Central Park received more than 8 inches. Oil infrastructure in Ecuador was damaged by a rock slide, potentially endangering supply. Meanwhile, oil held on tankers fall by more than 20% last week, the latest sign of ebbing inventories.
That combination of booming demand, scratchy supply and dwindling stockpiles has helped crude soar this month, with top banks and oil companies saying prices may soon pass $100 a barrel.
While the advance has gained extra support as Russia amasses troops near Ukraine. The Organisation of Petroleum Exporting Countries (Opec) and its allies gathers on Wednesday to assess the market.
“Markets opened up strongly due to the cold weather in the US,” said Keshav Lohiya, founder of consultant Oilytics. “The oil rally still has a lot of steam left as geopolitical risk continues to heat up.”
As economies continue to recover from the pandemic, oil product markets are roaring. Refiners across the globe are making robust profits from producing gasoline, with the demand outlook signalling continuing strength.
Global oil markets are in backwardation, a bullish pattern in which near-term contracts command a premium to those further out. The spread between Brent’s first month and sixth month futures contract was the strongest since 2013 at Friday’s close.
Vietnam’s largest refinery said its partners have agreed to avoid a “lengthy shutdown” and maintain stable operations.
Japan is willing to consider applying a trigger clause that would suspend tax on gasoline if it rises above a certain level.