(Bloomberg) -- Oil climbed to near its highs for the year after a US report showed signs of rising fuel demand heading into the summer driving season.
West Texas Intermediate rose 1.3% to top $79 a barrel after government figures showed US gasoline inventories falling 4.46 million barrels last week. That built off an earlier gain driven by Saudi Arabia's decision to raise prices to Asia and a rally in equities as Federal Reserve Chair Jerome Powell spoke to Congress.
US crude prices have tested the $80 psychological level for the last few sessions, but have been unable to push through it decisively. Yet now that WTI has had a “clean break” above $79 a barrel, “the technical path of least resistance has been confirmed to the upside,” said Fawad Razaqzada, a market analyst at City Index and Forex.com.
Crude prices have been on a slow and steady grind higher this year, supported by the OPEC+ cutbacks, tensions in the Middle East and disruptions to shipping in the Red Sea, including a strike on a commodity ship on Wednesday. The creeping pace of gains has crushed market volatility, and the Organization of the Petroleum Exporting Countries and allies agreed on Sunday to extend their existing output cuts to the end of June, potentially tightening the market and drawing down stockpiles.
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Signs of tightness in the physical market are apparent, with near-term futures for US benchmark WTI strengthening to a premium of as much as $1 over later-dated barrels. That's near the highest in four months, excluding volatile contract-expiration dates.
--With assistance from Josyana Joshua.
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