Oil rises above $45 for first time in 10 weeks

Bloomberg

Oil rises above $45 a barrel in London for the first time in 10 weeks as financial markets continued to advance on a vaccine breakthrough and US crude stockpiles appeared to retreat.
Brent futures advanced in tandem with equity markets, having been buoyed initially this week by the election of Joe Biden as US president and then Pfizer Inc.’s vaccine announcement.
At the same time, the overall price structure has strengthened with a sharp narrowing of the spreads between monthly contracts, signaling that fears of oversupply are abating.
“There’s optimism now that there’s light at the end of the tunnel,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA. “Expectations around the path to economic recovery, and a recovery in oil demand, have changed and oil prices are reflecting that.”
The discount on front-month Brent versus contracts three months out has shrunk to the smallest gap since July.
In US markets, the spread between June and December 2021 has narrowed to 34 cents from $1.34 at the start of the month.
The American Petroleum Institute reported crude inventories dropped by 5.15 million barrels last week, with gasoline and diesel also decreasing, according to people familiar with the data. Official government figures are due on Thursday. The median estimate in a Bloomberg survey forecast a 1.9 million-barrel decline in crude stockpiles.
BMO Capital Markets said it is “too soon” for $50 oil as the market contends with rising Libyan output. The Opec member has boosted oil production to more than 1 million barrels a day, a milestone for the North African country after civil war all but shut its energy industry earlier this year.
The next major event for the market is the Opec+ meeting at the end of the month, with Vitol Group predicting a major draw on excess global inventories if the alliance delays a planned easing of cuts.