Investing.com -- Oil prices rose in Asian trade on Tuesday, extending gains from the prior session as the U.S. government confirmed plans to begin refilling its heavily-drawn on Strategic Petroleum Reserve (SPR), which sent a buy signal to markets.
The Department of Energy (DOE) said on Monday that it will purchase up to 3 million barrels of oil for the SPR, confirming speculation over the move following several media reports last week.
The move comes after the Biden administration drew the SPR to its lowest level since 1983 over the past year in a bid to bring down record-high fuel prices spurred by the Russia-Ukraine conflict.
While the drawdowns had worked as intended, bringing down U.S. gasoline prices substantially, they had also drawn ire from oil bulls and Biden’s political opponents.
The DOE also said that it had secured the cancellation of 140 million barrels in congressionally mandated sales from the SPR over the next four years.
The move offered much relief to oil prices, which were battered by fears of slowing economic growth over the past four weeks.
Brent oil futures rose 0.6% to $75.66 a barrel, while West Texas Intermediate crude futures rose 0.6% to $71.50 a barrel by 22:21 ET (02:21 GMT). Both contracts surged nearly 2% each on Monday.
Oil prices were also aided by the prospect of tighter supplies, with reports of Canadian wildfires pointing to potential disruptions in oil flows from North America. This comes with improving fuel demand thanks to the U.S. summer season.
But on the other hand, the factors that spurred a four-week losing spree in oil prices still remained in play. Markets remained on edge as data on Tuesday showed that Chinese industrial production and retail sales grew at a slower-than-expected pace in April, pointing to a staggered economic recovery in the world's largest oil consumer.
The weak reading also limited bigger gains in oil prices for the day.
Focus is now on key U.S. retail sales and industrial production data due later in the day.
Recent economic readings have shown that the world’s largest economies and oil consumers are cooling, which in turn could potentially stymie oil demand later this year.
Fears of tighter U.S. monetary conditions also came to the fore this week after several regional Federal Reserve presidents warned that the bank would likely do more to combat sticky inflation.
Focus this week is also on several more Fed speakers, most notably Chair Jerome Powell on Friday.