Oil is poised for the longest winning streak in almost two years after an industry report pointing to another decrease in US crude stockpiles added impetus to a rally that’s driven prices to a 10-month high.

Futures in New York rose for a seventh session toward $ 54 a barrel, heading for the longest run of gains since February 2019. The American Petroleum Institute reported crude inventories fell by 5.82 million barrels last week, according to people familiar with the figures. If confirmed by official government data on Wednesday, it would be a fifth weekly draw.

Saudi Arabia, meanwhile, trimmed crude supply to at least six refiners in Asia and Europe for February after flagging additional cuts to output last week. The reductions focused primarily on heavier grades.

Covid-19 vaccine breakthroughs and the recent Saudi pledge to deepen output cuts have underpinned a meteoric rise for US crude since the end of October, with prices almost 50% higher. There are still concerns about the pace of the global fuel demand recovery as the outbreak continues to spread in some regions and as coronavirus shots are slowly administered.

“This oil rally definitely has legs,” said Jeffrey Halley, a senior market analyst at Oanda Asia Pacific. “This is mostly driven by the API data, which reported a big fall in inventories. We could see oil move further towards $ 55 a barrel by the end of the week. “

(Also read | Oil hits 11-month high towards $ 57 as Saudi supports production cuts)

The new year rally in crude, however, is testing the technical limits of both the US benchmark and Brent in London after prices surged into overbought territory, signaling a correction is due. A weaker dollar on Tuesday made raw materials priced in the currency more attractive and helped to push oil higher.

Brent’s prompt timespread was 9 cents a barrel in backwardation – a bullish structure where near-dated prices are more expensive than later-dated ones – compared with a 7-cent contango at the start of last week.

The API also reported that fuel stockpiles expanded last week. Gasoline inventories rose by 1.88 million barrels, while distillate supplies – which include diesel – gained by 4.43 million barrels.

This story has been published from a wire agency feed without modifications to the text.