Oil prices extended gains on Thursday after the OPEC+ alliance of major producers stuck to a reduced output policy, and as crude stockpiles in the United States fell to their lowest levels since March last year.
Brent crude futures gained 47 cents, or 0.8%, to $58.93 a barrel, by 0317 GMT, having earlier hit their highest since Feb. 21, 2020 in the wake of the OPEC+ decision.
U.S. West Texas Intermediate (WTI) crude futures climbed 49 cents, or 0.9%, to $56.18 a barrel after reaching its highest settlement level in a year on Wednesday.
"Crude prices have been rising higher now that OPEC+ has convinced the energy market that they are determined in accelerating market re-balancing without delay," said Edward Moya, senior market analyst at OANDA.
The Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, extended its current oil output policy at a meeting on Wednesday, a sign that producers are happy that their deep supply cuts are draining inventories despite an uncertain outlook for a recovery in demand as the coronavirus pandemic lingers.
A document seen by Reuters on Tuesday showed OPEC expects the output cuts will keep the market in deficit throughout 2021, even though the group cut its demand forecast.
Also supporting prices, U.S. crude oil stockpiles fell by 994,000 barrels last week to 475.7 million barrels, their lowest since March, the U.S. Energy Information Administration said on Wednesday. Analysts in a Reuters poll had forecast a 446,000-barrel rise.
Continued progress in rolling out COVID-19 vaccines is also an important driver of oil prices, OANDA's Moya said.
"The world now has several effective COVID vaccines that should really force energy traders to upgrade their return to pre-pandemic behaviour forecasts," he said.
The market was also bolstered by news that Democrats in the U.S. Congress took the first steps toward advancing President Joe Biden's proposed $1.9 trillion coronavirus aid plan.
In a separate development, the United States has filed a lawsuit to seize a cargo of oil it says came from Iran rather than Iraq, as stated on the bill of lading, and contravenes U.S. terrorism regulations.