By Barani Krishnan
Investing.com - Oil prices were up modestly Tuesday, holding on to advances from the previous session, ahead of key U.S. government data that will show whether demand for fuels is improving appreciably as businesses try to get back on their feet from Covid-19 lockdowns.
“The ‘price’ of oil has a lot of optimism in it in the near term with all of the COVID risks but … I could (also) paint a picture of reasons why I think prices are about to crater,” said Scott Shelton, energy futures broker at ICAP (LON:NXGN) in Durham, North Carolina. “My conviction on both currently is pretty close to nil and I don’t think I am alone.”
New York-traded West Texas Intermediate, the benchmark for U.S. crude, was up 41 cents, or 1.1%, to $37.53 per barrel by 12:32 PM ET (16:32 GMT). It rose 2.4% in the previous session.
London-traded Brent, the global benchmark for oil, gained 65 cents, or 1.6%, to trade at $40.37. It rose 2.6% on Monday.
The U.S. economy is unlikely to achieve full recovery until Americans are certain that the coronavirus pandemic has been contained, Federal Reserve Chairman Jay Powell said on Tuesday.
"Moreover, the longer the downturn lasts, the greater the potential for longer-term damage from permanent job loss and business closures,” Powell said in testimony before a Senate banking committee.
Oil prices rose ahead of the American Petroleum Institute’s weekly snapshot on crude and fuel products inventories due at 4:30 PM ET. The API numbers serve as precursor for official stockpiles data scheduled for Wednesday from the U.S. Energy Information Administration.
A consensus of analysts’ estimates tracked by Investing.com showed that U.S. crude inventories likely grew by 500,000 barrels for the week ended June 12. Crude stockpiles rose 5.72 million barrels in the previous week to May 5 to reach a record high of 538 million barrels, EIA data showed.
Distillate stockpiles, led by diesel, is, meanwhile, expected to have risen 2.65 million barrels, adding to the previous week’s gain of 1.6 million. Distillate stockpiles have grown by nearly 53 million barrels in total over nine weeks, EIA data showed.
Gasoline stockpiles, the one bright spot on the oil complex so far, is expected to have risen by 230,000 barrels versus a previous build of 866,000.