US crude futures surged to a one-year high on Tuesday, with the West Texas Intermediate trading close to $55 per barrel ahead of a key meeting of Opec+ producers.
Futures in New York gained 2.33 per cent, trading at $54.80 per barrel at 5.08pm UAE time. Brent, the international benchmark, was up 2.31 per cent at $57.65 per barrel.
Prices are supported by a weak US dollar, which tends to be bullish for commodities.
Oil has been trading higher as part of a commodity 'supercycle', receiving a boost from the deployment of vaccination programmes in several parts of the world.
Crude is poised to remain higher for the remainder of the year on hopes of "increased mobility" following the vaccination rollout, according to UBS.
Prices are also supported by market fundamentals including the drawdown of nearly 290 million barrels in the second half of last year. OECD stock levels gradually drained, picking up pace from 0.57m bpd in the third quarter to 2.58m bpd in the final three months of the year, the bank said.
The Swiss lender forecast that Brent will trade as high as $63 per barrel in the second half of 2021, and reach $65 per barrel in the first quarter of 2022 as global demand recovers to 100m bpd during the last six months of the year.
The lowering of inventory levels was helped in part by the collective action of the Opec+ group of producers. The alliance headed by Saudi Arabia and Russia drew back a record 9.7m bpd of oil at the height of the Covid-19 lockdowns last year to counter a fall in demand. The group lowered its restrictions and is continuing to cut at the rate of 7.2m bpd from the beginning of the year.
Opec+'s joint ministerial monitoring committee will meet on Wednesday to assess its members' compliance with the pact.
Oil markets have also been steadied by Saudi Arabia's pledge to volunteer 1m bpd of additional cuts to makeup for increases from Russia and Kazakhstan in the winter.
