Recovery in fuel demand lifts oil
Oil rises for second session on signs of strong fuel demand in western economies, while the prospect of Iranian supplies returning fade
Singapore — Oil prices rose for a second session on Wednesday on signs of strong fuel demand in western economies, while the prospect of Iranian supplies returning faded as the US secretary of state said sanctions against Tehran were unlikely to be lifted.
Brent crude futures were up 37c, or 0.5%, at $72.59 a barrel at 5.20am GMT and earlier rose to $72.83, the highest since May 20, 2019. Brent rose 1% on Tuesday.
US West Texas Intermediate (WTI) crude futures jumped 39c, or 0.5%, to $70.44 a barrel after rising to as high as $70.62, the most since October 17 2018. WTI prices climbed 1.2% on Tuesday.
“Improved demand outlook appears to be bolstering crude oil prices, as the successful vaccine rollouts and summer driving season in the US and Europe continues to support fuel demand,” said Margaret Yang, a strategist at Singapore-based DailyFX.
Recent traffic data suggests travellers are hitting the roads as restrictions ease, ANZ Research analysts said in a note, pointing to TomTom data that showed traffic congestion in 15 European cities had hit its highest since the coronavirus pandemic began.
On Tuesday, the US Energy Information Administration forecast fuel consumption growth this year in the US, the world’s biggest oil user, would be 1.49-million barrels a day, up from a previous forecast of 1.39-million barrels a day.
In another positive sign, industry data showed US crude oil inventories fell last week, in line with analysts’ expectations, according to a Reuters poll.
The American Petroleum Institute reported crude stocks fell by 2.1-million barrels in the week ended June 4, two market sources said, citing the data.
Stockpile data from the US Energy Information Administration is due on Wednesday at 2.30pm GMT.
Price gains had been capped in recent weeks as oil investors had been assuming that sanctions against Iranian exports would be lifted and oil supply would increase this year as Iran’s talks with western powers on a nuclear deal progressed.
However US secretary of state Antony Blinken said on Tuesday that even if Iran and the US returned to compliance with a nuclear deal, hundreds of US sanctions on Tehran would remain in place.
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