Oil prices rise for second day on signs of strong fuel demand recovery

Topics Oil Prices | Crude Oil Price | OPEC

Photo: Reuters

By Sonali Paul

MELBOURNE (Reuters) - Oil prices rose for a second day on Wednesday on signs of strong fuel demand in Europe, while the prospect of a near-term return of Iranian oil supply faded as the U.S. secretary of state said sanctions against Tehran were unlikely to be lifted.

Brent crude futures were up 15 cents, or 0.2%, at $72.37 a barrel at 0131 GMT and earlier rose to $72.58, the highest since May 20, 2019. Brent rose 1% on Tuesday.

U.S. West Texas Intermediate (WTI) crude futures jumped 20 cents, or 0.3%, to $70.25 a barrel after rising to as high as $70.42, the most since Oct. 17, 2018. Prices climbed 1.2% on Tuesday.

The market is being boosted by a solid outlook for fuel demand growth as travel curbs are lifted in Europe with more people getting vaccinated.

"Recent traffic data suggests travellers are hitting the roads as restrictions ease," ANZ Research analysts said in a note, pointing to TomTom data which showed traffic congestion in 15 European cities had hit its highest since the coronavirus pandemic began.

"The boost to demand is expected to be strong," ANZ analysts said.

On Tuesday, the U.S. Energy Information Administration forecast fuel consumption growth this year in the United States, the world's biggest oil user, would be 1.49 million barrels per day (bpd), up from a previous forecast of 1.39 million bpd.

In another positive sign, industry data showed U.S. 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 U.S. Energy Information Administration is due on Wednesday at 1430 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 U.S. Secretary of State Antony Blinken said on Tuesday that even if Iran and the United States returned to compliance with a nuclear deal, hundreds of U.S. sanctions on Tehran would remain in place.

 

(Reporting by Sonali Paul; Editing by Christian Schmollinger)


(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel