NEW YORK: Oil prices reached their highest in more than two years on Tuesday, buoyed by expectations demand will recover rapidly in the second half of 2021.
Brent crude rose 77 cents, or 1.1%, to $73.63 a barrel by 11:19 a.m. EDT (1519 GMT). The global benchmark during the session hit $73.90 a barrel, its highest since April 2019.
US oil rose 86 cents, or 1.2%, to $71.74 a barrel. It hit a session high of $72.03 a barrel, its highest since October 2018.
"With supply growth lagging demand growth in the near term, faster falling oil inventories are supporting oil prices," UBS analyst Giovanni Staunovo said.
He said comments on Tuesday from some of the world's top oil traders added to the bullish mood.
The head of trading house Vitol sees oil prices moving between $70-$80 a barrel this year as the Organization of the Petroleum Exporting Countries and allied producers (OPEC+) are predicted to maintain supply discipline.
"We have had those stock draws for a couple months, the market is heading in the right direction," Russell Hardy told the FT Commodities Global Summit.
Trafigura Chief Executive Jeremy Weir told the same event there was a good chance prices could reach $100 a barrel because of falling reserves before the world reaches peak oil demand.
OPEC+ producers have been gradually relaxing record output curbs in recent months.
"The decision by OPEC+ to be overly cautious in returning supply to the market, whether this is true caution or they are intentionally stoking oil prices higher, has been a main tenant in seeing $73 per barrel Brent," said Louise Dickson, oil markets analyst at Rystad Energy.
Analysts polled by Reuters expect US crude stocks to have fallen for a fourth week in a row, dropping by about 3 million barrels last week. Industry data is due at 4:30 p.m. Tuesday, followed by official figures on Wednesday morning.
Investors and traders are also watching the outcome of a two-day US Federal Reserve meeting that starts on Tuesday for signals on when it will start to scale back monetary stimulus.
The Fed is getting ready to debate how and when to start tapering a massive asset-purchase program that helped to support the US economy during the pandemic.