CommoditiesWTI Trades Above $70 Backed by Strong Demand Outlook

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 the Iranian oil supply faded as the U.S. secretary of state said sanctions against Tehran were unlikely to be lifted.

Brent crude futures were up 15 cents, or 0.2%, at $72.37 a barrel at 0131 GMT and earlier rose to $72.58, the highest since May 20, 2019. Brent rose 1% on Tuesday.

U.S. West Texas Intermediate (WTI) crude futures jumped 20 cents, or 0.3%, to $70.25 a barrel after rising to as high as $70.42, the most since Oct. 17, 2018. Prices climbed 1.2% Tuesday.

oil
U.S WTI Index Performance Chart

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, 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.

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, pushing WTI & Brent to new leevels.

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 on both WTI and Brent had been capped in recent weeks as oil investors assumed 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.

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