Oil hits highest level in more than a year, posts seventh straight day of gains

A woman wearing a face mask walks on the ocean front while oil tankers are seen anchored off the coast of Long Beach, California, after sunset on April 25, 2020.
Apu Gomes | AFP | Getty Images

Oil hit 13-month highs on Tuesday with the Brent benchmark staying above $60 a barrel, supported by supply cuts, a weak dollar and optimism over a recovery in fuel demand.

Brent crude futures for April settled 53 cents, or 0.88%, higher at $61.09 per barrel. U.S. West Texas Intermediate crude (WTI) settled 39 cents, or 0.67%, higher at $58.36 per barrel. Both contracts had hit their highest since January 2020 earlier on Tuesday after having risen for six straight sessions.

The dollar was down 0.4% against a basket of currencies, making dollar-priced commodities more attractive to holders of other currencies.

Top exporter Saudi Arabia is curbing supply in February and March, on top of cuts by producers in the Organization of the Petroleum Exporting Countries and their allies, prompting forecasts of a supply deficit this year.

Also, Libya's output has fallen to 1.04 million barrels per day (bpd) from 1.3 million bpd late last year due to an ongoing strike by Petroleum Facilities Guards, a Libyan oil source said on Monday.

Signalling no swift return of Iranian barrels into the market, Tehran and Washington appeared to be deadlocked over a resolution of sanctions on the OPEC member.

Investors are also pinning hopes on demand recovery when COVID-19 vaccines take effect and as governments and central banks deploy huge stimulus packages to shore up economic activity.

"Given the amount of liquidity in the system thanks to the U.S. Fed (Federal Reserve), all asset prices are inflated. We see prices reaching $80 per barrel next year and there is an outside chance of a $100," said Amrita Sen, co-founder of the Energy Aspects thinktank.

Investors are looking ahead to the U.S. weekly oil inventories data due later on Tuesday.