(Bloomberg) — Oil advanced amid a weaker dollar and as key timespreads surged with expectations for further supply declines at the biggest storage hub in the U.S.

Futures in New York climbed as much as 2% on Monday with U.S. stocks rising and the dollar dipping, boosting the appeal of commodities priced in the currency. Investors are watching commentary from Federal Reserve officials this week after St. Louis’s James Bullard said interest rates may need to rise in 2022.

Key U.S. time spreads strengthened, indicating a tightening of supplies. The prompt spread for West Texas Intermediate crude moved into the deepest backwardation since about 2018 on Monday– where near-dated prices are more expensive than later-dated ones. Data-provider Genscape Inc. was said to report a 2.6 million-barrel-drop in Cushing, Oklahoma, stockpiles last week, according to people with knowledge of the report. Supplies are currently at the lowest since March 2020.

Crude is up almost 50% this year as major economies emerge from restrictions and lockdowns after the rollout of Covid-19 vaccinations worldwide. Demand has rebounded, especially in the U.S., Europe and parts of Asia. Futures may hit $100 a barrel next year as pent-up demand for travel is unleashed, while investment in new supplies is crimped by environmental pressures, according to Bank of America Corp.

“Oil fundamentals are still tightening, with oil demand recovering further as people in the U.S. and Europe enjoy the removal of restrictions on mobility,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “Meanwhile, OPEC+ production is rising only modestly, and refiners who had hoped for an Iranian deal now need to secure barrels elsewhere.”

See also: Raisi Victory Will Delay Return of Iran’s Oil, Analysts Say

Meanwhile, inconclusive nuclear talks between world powers and Iran — which has elected a new hardline president — allayed prospects for a swift revival of the Islamic Republic’s crude exports. Diplomats adjourned a sixth round of meetings with significant gaps remaining to mend the Iranian nuclear accord, the third time since talks began in April that negotiators have missed self-imposed deadlines to rejuvenate the agreement.

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The failure to clinch a deal puts additional pressure on other members of the OPEC+ coalition, which meets next week to consider restoring more oil output.

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