Benchmark oil prices hit their highest level in more than a year on Tuesday, as traders bet on a vaccine-fuelled recovery in global demand.
Production cuts and a rally on wider financial markets this week also saw investors pile into the sector, despite BP (BP.L) posting its first annual loss in a decade.
US West Texas Intermediate crude futures (CL=F) have risen above the $54 mark for the first time since January 2020, trading at $54.22 (£39.58) at around 4am in New York.
Brent oil futures (BZ=F), the international benchmark, hit their highest since last February in a third day of gains. Brent was trading at $77.05 a barrel.
Shares in energy giant BP slumped more than 3.6% as it recorded a $3.7bn annual loss, however.
But it predicted a recovery in oil demand in 2021 in its latest results, with its pace resting on “governments' policies and individuals' self-imposed actions as vaccine distribution proceeds.”
It also told investors that “active market management” by the Organization of Petroleum Exporting Countries and allies (OPEC+), and limited supply growth from other producers, would bring down high inventory levels.
It came as a survey by Reuters also found major producers were restraining output growth “roughly in line with their commitments.”
OPEC+ production growth in January was less than expected, while Saudi Arabia is slashing its output by one million barrels per day from this month.
Watch: Pandemic drives BP to first loss in a decade
Production restraint has buttressed prices in recent months, but vaccine developments have also boosted expectations for demand.
A rebound on Wall Street on Monday, which spilled over into Asian and European stocks on Tuesday, has driven up demand for oil this week. Investors have started to “look past the recent GameStop driven volatility,” noted Michael Hewson, chief market analyst at CMC Markets UK.
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