FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base
June 1, 2021
By Noah Browning
LONDON (Reuters) -Oil prices rose on Tuesday, with Brent hitting above $71 and trading at its highest since March, on expectations for growing fuel demand during the summer driving season in the United States as OPEC+ agreed to boost output.
Prices were also boosted by Chinese data showing that the country’s factory activity grew at its fastest this year in May.
Brent crude futures for August gained $2.01, or 2.9%, to $71.33 a barrel by 1401 GMT, its highest intra-day price since March 8.
U.S. West Texas Intermediate crude for July was at $68.85. That was up $2.53, or 3.8%, from Friday’s close, with no settlement price for Monday because of a U.S. public holiday.
“Oil prices today are rising as the market is getting increasingly confident that demand is reaching the end of the recovery tunnel, with strong usage indications coming globally, from the United States to China,” said Louise Dickson, oil markets analyst at Rystad Energy.
Tracking business GasBuddy said Sunday’s U.S. gasoline demand, coinciding with the Memorial Day weekend, jumped 9.6% above the average of the previous four Sundays. That was the highest Sunday demand since the summer of 2019.
The price gains were capped, though, by expectations that more output will hit the market.
The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, also agreed to continue a slow easing of supply curbs in their meeting on Tuesday, an OPEC source said, as producers balance an expected demand recovery against a possible increase in Iranian output.
“The bull-recipe for the oil market is still intact: reviving demand, muted U.S. shale oil response together with controlled and restrictive supply from OPEC+, thus resulting in further declines in inventories and thus yet higher oil prices,” said Bjarne Schieldrop, chief commodity analyst at SEB in Oslo.
OPEC+ decided in April to return 2.1 million barrels per day (bpd) of supply to the market from May to July, anticipating rising global demand despite the very high number of coronavirus cases in India, the world’s third-largest oil consumer.
(Additional reporting by Jessica JaganathanEditing by Barbara Lewis, David Goodman and David Evans)