NEW YORK: Oil prices rose on Tuesday, with Brent hitting above $71 and trading at its highest since March, on expectations for growing fuel demand during the summer driving season in the United States as OPEC+ agreed to boost output.
Brent crude futures for August gained $1.02, or 1.5pc, to $70.34 a barrel by 12:12 p.m. EDT (1612 GMT), after hitting $71 earlier in the session - its highest intra-day price since March 8.
U.S. West Texas Intermediate crude for July was up $1.56, or 2.4pc, to $67.88.
"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 U.S. gasoline demand, coinciding with the Memorial Day weekend, jumped 9.6pc above the average of the previous four Sundays. That was the highest Sunday demand since the summer of 2019.
Prices were also boosted by Chinese data showing that the country's factory activity grew at its fastest pace this year in May.
The gains were capped, though, by expectations that more output will hit the market.
The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, also agreed to continue a slow easing of supply curbs in their meeting on Tuesday, an OPEC source said, as producers balance an expected demand recovery against a possible increase in Iranian output.
"The deal with Iran is very much in flux about whether or not it will get done, which is making the market tense," said John Kilduff, partner at Again Capital LLC in New York.
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 high number of coronavirus cases in India, the world's third-largest oil consumer.
"(OPEC is) suggesting that the pandemic-induced supply glut has now been virtually erased and that additional global inventory draws are likely going forward," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.