Oil prices open March 2021 on a strong note, supported by optimism about COVID-19 vaccinations, a U.S. stimulus package and growing factory activity in Europe despite coronavirus restrictions.
Brent crude was up 63 cents or 1% at $65.05 a barrel by 1150 GMT, and U.S. West Texas Intermediate (WTI) crude jumped 62 cents or 1% to $62.12 a barrel. Both contracts finished February 18% higher.
"The three major supportive factors are the prevalent vaccine rollouts, the optimism about economic growth and the view that the oil balance will get tighter as a result of the first two points," PVM Oil Associates analyst Tamas Varga said.
Support also came from a $1.9 trillion coronavirus relief package passed by the U.S. House of Representatives on Saturday. If approved by the Senate, the stimulus package would pay for vaccines and medical supplies, and send a new round of emergency financial aid to households and small businesses, which will have a direct impact on energy demand.
The approval of Johnson & Johnson's COVID-19 shot also buoyed the economic outlook.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) meet on Thursday and could discuss allowing as much as 1.5 million barrels per day of crude back into the market. ING analysts said OPEC+ needs to be careful to avoid surprising traders by releasing too much supply. "There is a large amount of speculative money in oil at the moment, so they will want to avoid any action that will see (those investors) running for the exit," the analysts said.
(Reuters reporting by Bozorgmehr Sharafedin; Additional reporting by Jessica Jaganathan and Florence Tan; Editing by Jason Neely and Edmund Blair)
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