Oil prices appreciated on Tuesday over optimism of a rapid rebound in fuel demand as coronavirus lockdown curbs are lifted around the world, but gains are limited by threat of persistent glut in the market.
Brent crude futures notched up 0.5% or 22 cents as of 07:47 West Africa Time to $41.02 a barrel. It had dipped by $1.50 on Monday, halting seven straight days of gain.
US West Texas Intermediate (WTI) crude futures jumped 0.8% or 31 cents to $38.50 per barrel, having lost $1.36 on Monday.
Nigeria’s Bonny Light similarly retreated at the last session, shedding 1.92% or 79 cents to close at $40.38.
“With Brent holding very nicely above $40, there’s talk among traders that WTI will test that level soon,” said Michael McCarthy, Chief Market Strategist at CMC Markets.
Read also: Oil prices climb higher on hopes of sustained supply cuts, Bonny Light now $38.27
Goldman Sachs reviewed its 2020 oil price projections upward with Brent now seen at $40.40 per barrel and WTI at $36 but it warned that prices would probably recede in the weeks ahead owing to demand uncertainty and stock overhang.
Gains posted on Tuesday emerged amidst the reopening of the economy of New York, U.S. city worst hit by the coronavirus pandemic after roughly three months of closure, buoying fuel demand.
U.S. oil and gasoline stocks are estimated to have crumbled by 1.5 million barrels and around 100,000 barrels respectively in the week to 5th June, a preliminary Reuters poll demonstrated ahead of a report from the American Petroleum Institute industry group later on Tuesday.
Nevertheless, distillate stocks, which include diesel and heating oil, were envisaged to rise by 2.9 million barrels.
“You’ve got demand recovering gradually but steadily. However there’s still massive excess supply, so OPEC and friends need to control barrels coming into the market,” said Lachlan Shaw, Head, Commodity Research at National Australia Bank.
But Saudi Arabia said Monday the kingdom and its allies: Kuwait and United Arab Emirates would not extend an additional cut of 1.18 million barrels per day together with OPEC+ cuts in July.
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