Crude oil prices rose sharply on Tuesday, with traders betting on hopes demand for oil will see a significant increase in the second of this year amid signs of a strong economic rebound from the pandemic.

Expectations that the official data, due Wednesday morning, will reveal another drop in weekly crude inventories contributed as well to oil’s uptick. Analysts expect crude stockpiles may have dropped by about 3 million barrels last week.

A slowdown in talks between Iran and global powers in reviving a 2015 nuclear deal also supported oil prices.

Markets are also looking ahead to the Federal Reserve’s monetary policy announcement, due Wednesday afternoon.

West Texas Intermediate Crude oil futures for July ended up by $1.24 or about 1.8% at $72.12 a barrel, the highest settlement in over two-and-a-half years.

Brent crude futures were gaining $1.25 or 1.7% at $74.11 a barrel a little while ago.

Traders now await weekly crude oil reports from the American Petroleum Institute (API) and Energy Information Administration (EIA). While the API’s report is due later today, the EIA is scheduled to release its data Wednesday morning.

Last Friday, the International Energy Agency (IEA) said in a report that it expects global oil demand to return to pre-pandemic levels late next year.

World consumption will once again surpass 100 million barrels a day in the second half of 2022 as developed economies bring the virus under control, the agency said and called on the Organization of the Petroleum Exporting Countries (OPEC) to “open the taps to keep the world oil markets adequately supplied.”

The material has been provided by InstaForex Company – www.instaforex.com

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