Oil prices rose by 1 percent early on Monday, driven by expectations that recovering demand with summer travel and reopening economies will easily accommodate the gradual increase in OPEC+ production.
As of 10:16 a.m. EDT on Monday, WTI Crude was up 1.45 percent at $67.28, and Brent Crude was trading up 1.43 percent at $69.69, while equity markets in the United States and the UK are closed due to bank holidays.
“Crude futures were extending gains early Monday in Asia, still under last week's momentum prompted by renewed confidence in an ongoing US economic rebound. The broader financial markets also saw a return of risk appetite last week, as inflation fears were set aside,” Vanda Insights said in a daily note on Monday.
Gasoline consumption in the United States is surging these days with the unofficial start of the summer driving season, and airport travel numbers have jumped to their highest since March last year.
Crude futures “remain supported as the U.S. summer driving season begins at a time when gasoline stockpiles are the lowest in almost three decades while crude stockpiles at Cushing, the WTI delivery hub, has fallen some 17% below the five-year average,” Saxo Bank said in a note on Monday.
According to GasBuddy data, U.S gasoline demand on Sunday jumped by 6.8 percent from the prior Sunday and surged 9.6 percent above the average of the last four Sundays. It was the highest Sunday demand since the summer of 2019, said Patrick De Haan, head of petroleum analysis for GasBuddy.
Last week, weekly U.S. gasoline demand increased by 9.5 percent, or 4.7 percent higher than the four-week average, setting a new COVID weekly high, according to GasBuddy data De Haan tweeted on Sunday.
In addition, the U.S. Transportation Security Administration (TSA) reported 1,959,593 traveler throughput at American airports on Friday, May 28, the highest number since the pandemic started grounding flights in March last year.
OPEC+ is meeting on Tuesday, and it is widely expected to proceed with its plan to ease the cuts through July. The oil price rise early on Monday suggests that the market is optimistic that growing global oil demand could accommodate additional OPEC+ production increases and even a possible Iranian return to the market.
By Tsvetana Paraskova for Oilprice.com
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