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.
U.S. West Texas Intermediate (WTI) crude futures jumped 41 cents, or 0.58%, to $70.39 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.