After slipping late on Tuesday after a surprise U.S. inventory build reported by the API, oil prices rose on Wednesday morning, supported by the slow restart of the U.S. oil production lost during the Texas Freeze and a weaker U.S. dollar.
Before the EIA inventory report, WTI Crude and Brent Crude benchmarks were both trading up by 2 percent at 10:28 a.m. ET, with Brent at over $66 and the U.S. benchmark trading at $62.80.
Earlier on Wednesday, oil prices were struggling for direction, but firmed up in the morning Eastern Time after the U.S. dollar weakened.
Crude oil traded softer after reaching a fresh one-year high on Tuesday, after the API industry report contradicted surveys and reported the first rise in U.S. crude oil stockpiles in five weeks, Saxo Bank strategists said early on Wednesday, noting that both benchmarks are "still in overbought territory."
"With US producers having restored around 80% of lost production after the Texas freeze, the focus will increasingly turn to the outcome of next week's OPEC+ meeting," Saxo Bank said.
Many analysts have raised their oil price forecasts in recent days, expecting oil prices to rally into the summer amid an increasingly tighter market.
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Bank of America said this week that Brent Crude prices could hit $70 a barrel in the second quarter of 2021, and will average $60 this year, raising its average price outlook by $10 a barrel.
On Sunday, Goldman Sachs started the investment banks' upgrades of oil price forecasts, expecting Brent Crude prices to hit $75 a barrel in the third quarter this year, on the back of faster market rebalancing, lower expected inventories, and traders hedging against inflation.
"The 12-month Brent spread is quickly approaching a backwardation of US$7/bbl. This steepening of the forward curve is obviously increasing roll yields, and so making oil an increasingly attractive option for investors," ING strategists Warren Patterson and Wenyu Yao said on Tuesday.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More