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Oil Up, Brent Passes $70 Mark Due to Brightening Fuel Demand Outlook

CommoditiesJun 01, 2021 05:53
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By Gina Lee

Investing.com – Oil was up Tuesday morning in Asia, surpassing $65-mark a barrel, as investors are optimistic about fuel demand driven by ongoing economic recovery in the U.S., China, and parts of Europe, although they remain concerned about recent COVID-19 outbreaks in several countries.

Brent oil futures rose 1.20% to $70.15 by 12:41 AM ET (4:41 AM GMT), passing the $70 mark. WTI futures jumped 1.90% to $67.58.

The fuel demand outlook in the U.S. brightened as major cities emerged from lockdown. New York City is set to fully reopen its business on Jul. 1 and Chicago is widely easing restrictions across industries.

In China, the world’s top oil importer, data released earlier in the day said that the Caixin Manufacturing Purchasing Managers’ Index (PMI) increased to 52, its highest level since December 2020, in May.

“Eyes are on global demand…the U.S. is seeing many states ease restrictions and the opportunity for summer travel, and therefore petroleum demand, to have a significant rebound. If the U.S. sets pace and reopens,” Gary Cunningham, director at Stamford, Connecticut-based Tradition Energy told Bloomberg. Cunningham added that he expected other counties will follow.

On the COVID-19 front, the ever-rising numbers of COVID-19 cases in parts of the world such as India, Brazil and Japan continue to overshadow the market.

"While there are concerns over tighter COVID-19 related restrictions across parts of Asia, the market appears to be more focused on the positive demand story from the U.S. and parts of Europe," analysts from ING Economics said in a note.

Meanwhile, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) is due to meet later in the day. The cartel is reportedly to continue to gradually ease fuel supply curbs as they expected fuel demand will recover despite a possible increase in Iranian output.

"We believe that the market will be able to absorb this additional supply, and so would expect the group to confirm that they will increase output as planned over the next 2 months," the ING note added.

Oil Up, Brent Passes $70 Mark Due to Brightening Fuel Demand Outlook
 

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