Brent hits highest since March on demand prospects
- Americans hit the road on Memorial Day holiday.
- OPEC+ expected to continue slow increase in supply.
- Producer group and allies meets to set policy on Tuesday.
LONDON: Oil prices rose on Tuesday, with Brent hitting $71 and trading at its highest since March, on expectations for growing fuel demand during the summer driving season in the United States.
Prices were also boosted by Chinese data showing that the country's factory activity grew at its fastest this year in May.
Brent crude futures for August gained $1.76, or 2.5%, to $71.08 a barrel by 1228 GMT. US West Texas Intermediate crude for July was at $68.55. That was up $2.23, or 3.4%, from Friday's close, with no settlement price for Monday because of a US public holiday.
Brent earlier hit a session peak of $71.18, the highest intra-day price since March 8.
"Oil prices today are rising as the market is getting increasingly confident that demand is reaching the end of the recovery tunnel, with strong usage indications coming globally, from the United States to China," said Louise Dickson, oil markets analyst at Rystad Energy.
Tracking business GasBuddy said Sunday's US gasoline demand, coinciding with the Memorial Day weekend, jumped 9.6% above the average of the previous four Sundays. That was the highest Sunday demand since the summer of 2019.
The price gains were capped, though, by expectations that more output will hit the market.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are likely to agree to continue a slow easing of supply curbs when they meet on Tuesday, OPEC sources said, as producers balance an expected demand recovery against a possible increase in Iranian output.
"There are no signs of division within the group and we expect it to hold on to a steady course with very good control of the market," said Bjarne Schieldrop, chief commodity analyst at SEB in Oslo.
OPEC+ decided in April to return 2.1 million barrels per day (bpd) of supply to the market from May to July, anticipating rising global demand despite the very high number of coronavirus cases in India, the world's third-largest oil consumer.
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