Oil rose as a brighter outlook for economic growth and summer travel eased concerns around the impact of a resurgent coronavirus. Futures in New York closed 1.2 per cent higher on Tuesday after easing off session highs as US equities weakened. Oil prices remained supported by the International Monetary Fund’s stronger global growth forecast of a 6 per cent expansion this year and the US government’s expectation for rising gasoline demand this summer as Americans get back on the road. “We’ve gotten to a point of somewhat equilibrium,” and the market “is in an in-between spot,” said Bill O’Grady, executive vice president at Confluence Investment Management in St. Louis. “To maintain gains, we’re going to have to see the economy pick up and energy demand continue to rise.”
Prices were little changed after the American Petroleum Institute was said to report that U.S. oil inventories fell 2.62 million barrels last week. The report also showed a nearly 4.6 million-barrel gain in gasoline stockpiles, while distillate supplies also rose.
Oil rallied 22 per cent in the first quarter as the rollout of vaccines spurred optimism that demand would rebound, while the Organization of Petroleum Exporting Countries and its allies kept a tight rein on supply. While the consumption recovery in countries like the US is picking up steam, the global rebound remains shaky. In India, state-run refiners are looking to buy less crude from Saudi Arabia as demand in the Asian nation is poised to dip amid a resurgence of Covid-19, and relations between the two countries sour over prices.