London — Crude futures rose during European morning trading Feb. 23, as lingering US supply outages, OPEC+ cuts, and vaccine roll-outs improved the fundamental outlook while a strong backwardation and inflationary pressures provided financial support to prices, sources said.
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At 1147 GMT, ICE April Brent crude futures were up 48 cents/b at $65.72/b, while the NYMEX March light sweet crude contract was 48 cents/b higher at $62.18/b.
Market fundamentals were improving from tighter supply as US production was proving slow to return after shut-ins from the cold snap in Texas. February production of crude oil in the US would be at least 1 million b/d lower than last year, according to commodity data firm Kpler.
Meanwhile, commitments to voluntary additional 1 million b/d supply cuts from Saudi Arabia in February and March were also tightening supply, sources said.
"There is a growing view that the oil market is looking increasingly tight over the remainder of the year, with a number of analysts revising higher their price forecasts over the last week," analysts at ING said.
Market sources also pointed to progress being made with vaccine roll-outs as supportive of demand.
Crude futures were also buoyed by financial drivers such as a strong backwardation on the curve, which made holding a long oil futures position more attractive to investors due to the positive yield to be made when rolling on to the next contracts on expiry, sources said.
At 1147 GMT, the ICE April/May Brent crude futures spread was trading at 88 cents/b, up 3 cents/b on the day.
A weak US dollar and increasing sentiment that a period of high inflation is approaching after a strong global economic recovery and government stimulus were also boosting commodity prices, sources said.
Weekly inventory reports from the American Petroleum Institute and the Energy Information Administration are due to be released Feb. 23 and Feb. 24, respectively.