Oil prices saw an increase on Tuesday, continuing the previous day’s rally. This rise was attributed to expectations of higher seasonal fuel demand and potential U.S. crude purchases to replenish its petroleum reserve, despite the gains being somewhat restrained by a firmer dollar.
By 0038 GMT, Brent crude futures had climbed 28 cents, or 0.3%, reaching $81.91 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose by 31 cents, or 0.4%, to $78.05 per barrel. On Monday, prices surged approximately 3% to hit a one-week high, driven by the anticipation of increased fuel demand over the summer, despite the strengthening dollar linked to expectations that the U.S. Federal Reserve would maintain higher interest rates for an extended period.
Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, noted that the oil market was bolstered by the anticipation of rising fuel demand and the potential for the U.S. to bolster its strategic reserves if WTI remains below $79. He predicted that, given WTI’s proximity to its 200-day average, oil prices are likely to stay near current levels for some time.
Energy Secretary Jennifer Granholm indicated last week that the U.S. might accelerate the replenishment of the Strategic Petroleum Reserve as maintenance concludes by the end of the year, aiming to buy back oil at around $79 per barrel. Analysts at Goldman Sachs projected that Brent would rise to $86 per barrel in the third quarter, attributing this to robust summer transport demand, which they believe will lead to a third-quarter market deficit of 1.3 million barrels per day (bpd).
Investors are closely watching the release of the U.S. consumer price index data for May and the outcome of the Fed’s two-day policy meeting concluding on Wednesday for insights into the potential timeline for interest rate reductions. The market is also anticipating reports from the American Petroleum Institute and the Energy Information Administration (EIA) later this week, with expectations that U.S. crude oil stockpiles decreased while product inventories likely rose last week, according to a preliminary Reuters poll.
Additionally, investors await the monthly oil supply and demand data from the U.S. Energy Information Administration (EIA) and OPEC on Tuesday, and the International Energy Agency (IEA) on Wednesday.
Union Jack Oil plc (LON:UJO) is an onshore oil and gas exploration company with a focus on drilling, development and investment opportunities in the United Kingdom hydrocarbon sector.
