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Oil up as US summer draws beckon; set for 4th month of gains
[NEW YORK] Oil prices rose on Tuesday, heading for the four straight monthly gain, with investors betting on higher US fuel demand as peak driving season arrived in the No. 1 oil consumer.
Data from market intelligence firm Genscape showed a drawdown of 686,700 barrels at the Cushing, Oklahoma delivery point for US crude futures in the week to May 27, traders said, a report that provided further support to oil.
Strong US consumer spending data also supported oil prices, despite concerns that a robust economy could encourage the Federal Reserve to raise interest rates soon.
The front month in US crude's West Texas Intermediate (WTI) futures was up 54 cents, or 1.1 per cent, at US$49.87 a barrel by 11:06 am EDT (1506 GMT). WTI hit a 7-month high of US$50.21 on Thursday and was headed for a 9 per cent gain for May.
Brent crude futures' front-month showed a 14 cent, or 0.3 per cent, gain at US$49.90, ahead of expiry at Tuesday's settlement. Brent hit a November peak of US$50.51 on Thursday and was on track to end the month up 4 per cent.
Investors brushed aside earlier concerns about higher Middle East output that had weighed on Brent, and a fight for market share between Saudi Arabia and Iran which gather with other Opec members for a meeting on Thursday.
"The bulk of our technical indicators remain tilted in a bullish direction ... with upside possibilities to the US$52-52.50 areas still valid," said Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch & Associates.
US fuel demand is set to rise with the summer driving season that began with Monday's Memorial Day holiday. Hedge funds and other money managers last week raised bullish bets on WTI to 2016 highs for a second week in a row as prices headed toward US$50 a barrel.
On the global supply end, Asian imports of Iranian oil rose more than 13 per cent in April from a year before.
Iraq will supply 5 million barrels of extra crude to its international oil company partners in June, industry sources familiar with the issue said.
Iraq had been targeting record crude export volumes from southern terminals next month of 3.47 million barrels per day, ahead of the June 4 meeting of the Organization of the Petroleum Exporting Countries. "Anyone betting on a surprise outcome in Thursday's meeting is brave in doing so," Vienna-based JBC Energy said in a note.