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SINGAPORE: Oil prices rose on Tuesday with Brent surpassing $ 70, as optimism grew over the outlook for fuel demand during the summer driving season in the United States, the world’s largest consumer of oil.
Prices also rose after data from China showed factory activity rose to its fastest this year in May.
Brent futures for August gained 83 cents, or 1.2%, to $ 70.15 a barrel at 0223 GMT. U.S. West Texas Intermediate crude for July was $ 67.61 a barrel, up $ 1.29, or nearly 2% from Friday’s close, with no settlement price for Monday due to a day American holiday.
“While there are concerns about the tightening of COVID-19 related restrictions in parts of Asia, the market appears to be more focused on positive demand from the United States and parts of Europe,” said Tuesday from ING Economics analysts in a note.
“In the United States, the summer driving season officially kicked off after Memorial Day weekend, and we entered that period with gasoline stocks already tending to drop, and not too far from one. 5-year low for this time of year. “
Tracking company GasBuddy said on Sunday that U.S. gasoline demand jumped 9.6% above the average of the previous four Sundays, Sunday’s highest demand since summer 2019.
Price gains were capped, however, as more production is expected to hit the market.
The Organization of the Petroleum Exporting Countries and its allies – known as OPEC + – are likely to agree to continue to slowly ease supply brakes at a meeting on Tuesday, sources said. ‘OPEC, as producers balance an expected upturn in demand against a possible increase in Iranian demand. production.
OPEC + decided in April to return 2.1 million barrels per day (b / d) of supply to the market from May to July, because it predicted that global demand would increase despite the surge in coronavirus cases in India, the third largest consumer of oil in the world.
“We believe that the market will be able to absorb this additional supply, and we therefore expect the group to confirm that it will increase its production as planned over the next 2 months,” added ING Economics analysts. .