Crude oil prices surged higher on Tuesday as optimism about production cuts from leading crude producers outweighed some concerns about a jump in new coronavirus infections in central America and some parts across the globe.
Oil prices drifted down earlier in the session after Saudi Arabia said on Monday that the kingdom and its Gulf allies Kuwait and the United Arab Emirates are unlikely to extend additional output reductions.
However, oil prices bounced back after the Energy Information Administration (EIA) raised its 2020 forecasts for U.S. and Brent crude oil. EIA also lowered its forecast for U.S. oil production this year.
West Texas Intermediate Crude oil futures for July ended up $0.75 or nearly 2% at $38.94 a barrel.
Brent Crude futures advanced by $0.27 or about 0.65%, to $41.11 a barrel.
With several economies across the globe reopening gradually, demand for energy has picked up a bit in recent weeks. However, in the event of a second wave of coronavirus attack, demand for oil may well drop down again.
According to a report from the World Health Organization, the pandemic was “far from over.” It has urged countries to press on with effors to contain the virus.
Meanwhile, traders awaited the weekly oil reports from American Petroleum Institute (API) and the EIA. While the former is scheduled to release its weekly oil report later in the day, the latter’s weekly inventory data is due out at 10:30 ET on Wednesday.