By Barani Krishnan
Investing.com - U.S. crude prices settled above $70 per barrel Tuesday, the first time since 2018, as market participants focused on the likelihood of the government reporting another significant crude draw for last week that would underscore the summer demand for oil.
West Texas Intermediate crude, the benchmark for U.S. oil, settled up 82 cents, or 1.2%, at $70.05 per barrel. It was the highest close for WTI since October 2018.
Brent crude, which acts as the global benchmark for oil, settled up 73 cents, or 1.1%, at $72.22. Brent hit a two-year high of $72.38 earlier in the session.
Crude prices have been on a tear over the past week on expectations that the full reopening of the United States and the eventual coming-on-board of Europe will normalize demand for energy and clear any remaining oversupply concerns in the most developed nations.
The bullish outlook isn’t without its caveats, though.
Third-largest oil consumer India remains heavily bogged down by a Covid outbreak that is infecting more than 100,000 people daily while killing more 2,000.
While global aviation is picking up again as travelers start crisscrossing the world, jet fuel demand is way below pre-pandemic levels.
Another caveat — possibly the most significant — is the possibility of Iran securing a nuclear deal soon to export its crude without U.S. sanctions.
But none of this appears to have the potential to derail the oil rally for now.
“Oil remains the easiest trade in the commodity space now,” said Ed Moya, head of US research at online broker OANDA.
Tuesday’s rebound in crude came ahead of a weekly snapshot on U.S. oil supply-demand due from the API, or American Petroleum Institute.
The API snapshot, scheduled for release at 4:30 PM ET (20:30 GMT), comes before Wednesday’s official report from the U.S. Energy Information Administration on supply-demand of petroleum products for the week ended June 4.
According to a consensus of analysts tracked by Investing.com, U.S. crude crude stockpiles likely fell by 2.04 million barrels last week, versus the drop of 5.1 million in the previous week to May 28.
Gasoline inventories likely rose by 698,000 barrels versus the rise of 1.5 million in the prior week, consensus shows.
And stockpiles of distillates, made up of diesel and heating oil, likely increased by 1.36 million barrels last week after growing by 3.72 million the week before.