Oil prices headed higher, after the biggest daily jump in a month, as US crude inventories recorded their third straight weekly decline.
Brent crude traded above $85 a barrel after rising 1.6% on Wednesday, with WTI above $83 a barrel. National inventories shrank by 4.87 million barrels last week to their lowest level since February. While inventories typically fall at this time of year, they are below the five-year seasonal average.
Oil has been higher year-to-date, supported by OPEC+ supply cuts that have offset rising output from countries outside the oil alliance. Expectations of looser monetary policy in the United States have also helped crude, both by boosting appetite for riskier assets and by a weaker dollar. A weaker dollar makes commodities priced in the greenback more attractive to most buyers.
Meanwhile, spreads between futures contracts have widened, suggesting strong near-term demand. The gap between the two nearest Brent contracts was more than $1 a barrel in backwardation (a situation where nearer-dated contracts trade at a greater premium to longer-dated contracts), compared with a gap of 80 cents a month ago.
