(Bloomberg) -- Oil was steady near the highest level in more than a year after rallying on signs the global market is tightening and demand is improving.
Futures in New York traded near $58 a barrel after climbing 11% over the past six sessions as prices extended a robust recovery from the depths of the Covid-19 pandemic. Trafigura Group sees oil moving even higher as refiners increase processing to meet higher product demand amid tight crude supplies.
See also: Oil’s Remarkable Rebound From a Year of Catastrophe
While the rally has recently gained momentum, one technical indicator is signaling oil is overbought and due for a correction, and top traders Vitol SA and Gunvor Group Ltd. have expressed caution about the surge in prices.
Oil’s surge since the end of October has been underpinned by Covid-19 vaccine breakthroughs and a more recent pledge by Saudi Arabia to deepen output cuts. Stockpiles across regions including China have started to drain, while prompt timespreads are firming in a bullish structure indicating shrinking supplies.
Brent’s prompt timespread was 29 cents a barrel in backwardation on Monday -- a bullish structure where near-dated prices are more expensive than later dated-ones. That compares with a 7-cent contango at the start of the year.
©2021 Bloomberg L.P.