Oil prices climbed in Asian trade on Tuesday, extending gains from the previous session, buoyed by expectations of strong fuel demand from the U.S. during the summer, ahead of an output policy decision from OPEC+ at a June 2 meeting.
July Brent crude rose 21 cents to $83.31 a barrel by 0329 GMT. The more-active August futures rose 21 cents to $83.09.
U.S. West Texas Intermediate (WTI) crude futures for July were at $78.90 a barrel, up $1.18, or 1.52%, from Friday’s close, having traded through a U.S. holiday to mark Memorial Day without a settlement.
Oil prices rose over 1% on Monday in muted trade owing to public holidays in Britain and the United States after a downbeat week characterised by the outlook for U.S. interest rates in the face of sticky inflation.
Expectations of strong fuel demand with the start of the U.S. summer driving and vacation season provided price support, some analysts said.
Despite the general view that higher-for-longer interest rates could result in weak oil demand growth, “real-time mobility data indicates oil demand growth is still broadly healthy,” said UBS analyst Giovanni Staunovo in a client note.
On the air travel front, U.S. seat numbers on domestic flights for May rose by 5% month on month and almost 6% year on year to slightly above 90 million, data from flight analytics firm OAG showed, surpassing 2019 levels. International flight seat numbers for May rose by 11% year on year to around 14.2 million, with the levels also 8% higher than the same period in 2019, the data added.
Meanwhile, all eyes will also be on the upcoming online meeting of the OPEC+ on June 2, where traders and analysts are expecting production cuts to stay in place and buoy prices further.
“We expect oil prices to move higher in the coming days due to anticipated continued voluntary output cuts by oil producers and growing prospects for easing of U.S. monetary policy,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.
Yoshida added that the beginning of the U.S. driving season will also provide support.
Earlier, three sources from OPEC+ countries said an extension on voluntary output cuts of 2.2 million barrels per day into the second half of the year was likely.
A slight decline in the U.S. dollar also underpinned markets.
“Extending positive momentum from the last two sessions, crude oil prices seemed to have stabilised on Tuesday morning as a pullback in the US Dollar also aids the bullish outlook,” said senior market analyst at Phillip Nova, Priyanka Sachdeva.
(Reporting by Yuka Obayashi; Editing by Stephen Coates and Sonali Paul)