Bloomberg reports that prices rose 4.3% in New York to the highest since early March, The forward curves for both West Texas Intermediate and Brent have strengthened thanks to rising demand from Asia and progress toward a widespread vaccine rollout.
The rally accelerated with the start of a formal transition process to US, President-elect Joe Biden sending The Dow Jones Industrial Average past 30,000 for the first time.
Meanwhile, the industry-funded American Petroleum Institute was said to report that US crude supplies rose 3.8 million barrels last week, The report also showed an increase in gasoline inventories, but a draw in distillate stockpiles.
"The fact that we have more certainty on what hopefully is an orderly transition is putting some wind in the sails for crude," said Stewart Glickman, energy equity analyst at CFRA Research.
"The biggest issue ahead is how willing they'll be to cross the aisle and enable a stimulus package to happen. That's going to be a primary driver" for prices, Bloomberg reports.
The start of the transition process for the US presidency offers a welcome sense of certainty following disputes over the outcome of the November 3 election.
Additionally, reports that Biden is planning to tap former Federal Reserve chair Janet Yellen for Treasury Secretary is also raising hopes for more economic stimulus that could provide a much needed demand boost.
Still, some concerns linger over whether the Organisation of Petroleum Exporting Countries and its allies can keep output in check with rising crude prices possibly tempting some of the most cash- strapped members. The producer group meets at the end of the month to discuss whether to delay its planned tapering of output cuts in January.
But while the market may be strengthening on the outlook for improved demand in the near future, the pandemic's effects are still rippling around the globe. Total SE said it would halt its Donges refinery for several months as it's currently unprofitable due to weak demand. Several refineries in the US have shut because of the collapse in fuel demand.