Oil prices moved higher on Thursday, extending Wednesday's strong performance that followed US inventory data that showed a smaller than expected rise in crude stockpiles last week.
Data from the US Energy Information Administration on Wednesday showed crude inventories rose by 1.8 million barrels last week, missing expectations of a 2.8 million barrel increase. Stocks at the US delivery hub Cushing in Oklahoma, however, unexpectedly edged lower.
"Further declines in Cushing stocks should continue to support a narrowing in the Brent-WTI spread," said Warren Patterson at ING.
"The spread has already done a lot, having narrowed from almost $7 at the end of 2017 to around $3.70 currently."
Meanwhile, suggestions from OPEC, the oil cartel, that supply curbs from its members and several other producers including Russia, also helped support crude prices.
The OPEC-led supply curbs have been in place since January 2017 and are scheduled to last until the end of this year. But comments from Saudi Arabia's oil minister Khalid Al-Falih (left) - who said he's rather leave the market short of supply than lift output cuts too early - suggested extended curbs could be expected.
Brent crude rose 0.71% to $64.81 a barrel on Thursday morning, while Nymex West Texas Intermediate, the US benchmark, climbed 1.12% to $61.28.
Oil market correction
Crude markets have had a turbulent few sessions, mirroring the correction seen in equity markets this month on fears of inflation-led monetary policy tightening crimping global growth and, thus, demand for oil.
Indeed, as equity markets corrected - losing 10% or more from their most recent cyclical peaks - so too did the two main crude oil futures contracts.
From its three-year closing high of $70.52 a barrel on 26 January to its two-month closing low of $62.59 on 13 February, Brent crude fell 11.26%.
Similarly, Nymex WTI fell 10.49% from its recent closing peak of $66.14 to its low of $59.19 between the same dates.
Michael Tran, strategist at RBC Capital Markets, put the correction down to signs of oversupply emerging in the oil markets.
"The market has been overly focused on the race toward rebalance without realising that transient pockets of oversupply have been emerging in the physical market," he said.
Picture by Wikimedia Commons