Meanwhile, Saudi Aramco reports higher than expected earnings: File Image/Pixabay
Tuesday's crude trading activity was a repeat of earlier recent sessions, with prices climbing due to Covid restrictions being eased in the U.S. and across Europe, but the gains capped by rising infection rates in India.
Brent was up $1.01, or 1.48 percent, at $68.50 per barrel; West Texas Intermediate rose by 89 cents, or 1.38 percent, to $65.39.
Specifically, oil prices are supported by an anticipated surge in fuel demand as New York state, New Jersey, and Connecticut ease pandemic curbs and the European Union plans to welcome foreign visitors who have been vaccinated; in the U.K., prime minister Boris Johnson said his country's lockdown rules will be scrapped in seven weeks.
Louis Dickson, analyst, Rystad Energy
Prices will likely climb again to about $70 per barrel in the coming months
Bullish sentiment on Tuesday was also stoked by analysts in a Reuters poll estimating that U.S. crude inventories fell by 2.2 million barrels in the week to April 30.
Even considering the grim headlines emerging from Covid ravaged India, Louis Dickson, analyst at Rystad Energy, said, “Strong demand forecasts for the second part of 2021 are providing a bullish seat for traders to drive rallies, not allowing any strong negative price reaction to drag for long, even at times of crisis such as the recent one in India.”
Dickson added, “In fact, looking at balances going forward, prices will likely climb again to about $70 per barrel in the coming months, unless we see another policy change by OPEC+.”
More positive sentiment on Tuesday was delivered by John Kemp, commodities analyst for Reuters, who stated, "Even though crude prices are already trading close to their highest for two years, and near to or above the long-term average in real terms, funds expect a further increase in prices as global manufacturing booms in the months ahead."
Kemp went on to note that hedge funds boosted their position in petroleum for the third week running, confirming increasing confidence over rising prices for the rest of the year.
Meanwhile, the trend of energy giants reporting larger than expected gains continued on Tuesday with Saudi Aramco reporting a 30 percent jump in net income to $21.7 billion in the first three months of the year, up from $16.6 billion in the same period last year.
The company also said free cash flow in the first quarter of 2021 was $18.3 billion, up from $15 billion over the same period last year.