Additionally, next week's swearing in of U.S. president Joe Biden is buoying sentiment not only in crude circles but also in U.S., UK, and European stocks: The pan regional STOXX 600 index rose 0.4 percent on Tuesday, with the oil & gas and travel & leisure sectors climbing more than 1 percent each to lead the gains.
Crude stocks in the US dropped by 5.8 million barrels last week to around 484.5 million barrels, data from the American Petroleum Institute showed late on Tuesday. If confirmed by official government data on Wednesday, it would be a fifth weekly draw. Saudi Arabia, meanwhile, trimmed supply to at least nine refiners in Asia and Europe for February after flagging additional production curbs last week.More news: Evander Kane files for bankruptcy
Analysts said oil prices could see a correction in the coming months if fuel demand remains constrained by the pandemic. Japan is set to expand its state of emergency and an outbreak in China appears to be worsening.
Yet, Brent's rally faces "formidable resistance" from $58 a barrel to $60 a barrel, Bank of America Global Research said in a report. "This is mostly driven by the API data, which reported a big fall in inventories".More news: Resurgent Man United back on top of the Premier League
United States crude rose 1.1% to the highest since February 2020 at $53.90 a barrel, after opening at $53.29, and hit a low of $53.23, and Brent crude rose 1.2% to the highest since February at $57.40 a barrel, after opening at $56.71, and hit a low of $56.54. Brent's nearest contract has grown its premium to the following month to 9 cents a barrel, compared to a discount of 7 cents at the start of last week. Gasoline inventories climbed by 1.88 million barrels, while distillate supplies - which include diesel - gained by 4.43 million barrels. Inventories are expected to decline by 3 million barrels, according to the median estimate of a Bloomberg survey for Wednesday's USA government storage report.
"The recovery in oil demand is stalling in Europe in particular due to the prolonged lockdowns".More news: Quebec's COVID-19 vaccine plan runs contrary to new federal guidelines
Oil has been on a tear since OPEC and its allies agreed to keep curbing their output, building on a rally at the end of previous year on Covid-19 vaccine breakthroughs.