WASHINGTON (Dispatches) - Oil crept higher, with a demand increase from cold weather the latest addition to a rally that has pushed crude to a 10-month high.
Demand could get a boost of at least 1 million barrels a day, Goldman Sachs Group Inc. said, as frigid temperatures in Asia and Europe send other energy markets booming. In Japan, power generators have been buying several cargoes of low-sulfur fuel oil for the purpose of direct burning, according to traders.
West Texas Intermediate crude gained 0.4% to $53.44 a barrel. Brent crude increased 0.2% to $56.72 a barrel.
The market outlook has already been tightening. Saudi Arabia trimmed February supplies to at least 11 refiners in Asia and Europe after announcing surprise production curbs last week. U.S. inventories are also expected to decline in government data later, after the American Petroleum Institute reported crude stocks dropped by 5.82 million barrels last week.
Covid-19 vaccine breakthroughs and the recent Saudi pledge to deepen cuts have underpinned a meteoric rise for oil since the end of October, with prices up almost 50%. There are still concerns about global fuel demand as the virus continues to spread in some regions. Japan expanded its state of emergency and an outbreak in China appears to be worsening.