Oil advanced above $60 a barrel for this first time in more than a year as global supplies tighten and the demand outlook improves with the rollout of Covid-19 vaccines.
Futures in London gained as much as 1.2% before easing slightly on Monday, extending its rally after a third weekly gain. A year after the pandemic kept millions home, grounding planes and devastating fuel demand, a rebound in consumption along with output curbs is leading to a rapid tightening of markets. Timespreads for the global benchmark Brent have been firmly in a backwardation structure, indicating bullishness.
Meanwhile, the number of vessels sailing toward China jumped to a six-month high on Friday, signaling robust demand from the world’s biggest importer. Despite the positive indicators, top independent traders Vitol SA and Gunvor Group Ltd. have expressed caution about the recent surge in prices and one technical indicator is showing that oil is overbought.
