Oil prices hit a fresh 2016 high today, after smaller-than-expected US crude stockpiles quelled oversupply fears sparked by an earlier estimate.
Analysts, traders and commentators are keeping a close eye on oil data out of the US for signs that the market is starting to rebalance, with inventories being drawn down as shale gas producers are forced out by low prices.
It was also helped by speculation that major oil producers will meet in Russia next month to thrash out a deal.
Crude stockpiles added 2.1m barrels in the week ending 15 April, according to fresh data released today by the US Energy Information Administration (EIA).
This was below the stronger-than-expected 3.1m barrel build reported yesterday by the industry group American Petroleum Institute, but also above the increase of 1.6m barrels that analysts surveyed by Platts had pencilled in.
West Texas Intermediate crude, the US benchmark, reversed earlier losses to trade up 3.8 per cent to $42.6 per barrel. Meanwhile, Brent crude, the global benchmark, was 3.6 per cent higher at $45.61, having hit $45.9 earlier.
"There’s a real tug-of-war going on now between bulls and bears with the line in the sand being $40 for front-month WTI," David Morrison, senior market strategist at Spread Co, said in a note.
"So far, the bulls are winning as a pile of negative news has failed to derail a rally which took hold in mid-February."
Crude climbed on Monday despite disappointment over the collapse of production freeze talks at Doha over the weekend, largely due to a Kuwaiti oil workers strike which has now ended.