Brent passes $70 due to fuel demand outlook

Oil was up Tuesday morning in Asia as the fuel demand outlook in the US, China, and parts of Europe improved thanks to the ongoing economic recovery from Covid-19.

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 US continues to brighten as major cities emerged from lockdown. Businesses in New York City are set to fully reopen 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 US is seeing many states ease restrictions and the opportunity for summer travel, and therefore petroleum demand, to have a significant rebound. If the US 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, investor concerns about recent outbreaks in countries such as India, Brazil and Japan continue to linger.

“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 US and parts of Europe,” analysts from ING Economics said in a note.

Meanwhile, the Organization of the Petroleum Exporting Countries and its allies (<a href=’https://theenergyyear.com/companies-institutions/opec/’>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.

First published on Investing.com