(Bloomberg) — Oil climbed above $65 a barrel on optimism that the resumption of economic activity in the U.S. and Europe will underpin demand.
West Texas Intermediate gained 1.3%, while gasoline futures were up 1.8%. The European Union plans to ease curbs for vaccinated travelers this summer, while states around the New York region are set to relax capacity restrictions. That’s offsetting concerns about weaker oil consumption in parts of Asia, including key importer India, where Covid-19 remains rampant.
Oil has been climbing in recent weeks — amid a broad advance across commodity markets — as investors bet that the rollout of vaccines will permit a return to pre-pandemic conditions. Reflecting that rebound, Federal Reserve Chair Jerome Powell said on Monday that the U.S. economic recovery is “making real progress,” although he cautioned that the gains have been uneven.
“Brent crude oil trades higher but within the channel that has prevailed since mid-March,” said Ole Hansen, head of commodities strategy at Saxo Bank. Market currently has “growth and inflation most certainly in the driving seat for now,” as a bullish driver.
Crude’s gains on Tuesday were outpaced by those in oil products, most notably gasoline. In the U.S., profits to produce the fuel were at the highest since April 2020 as optimism grows that a reopening of the economy will boost demand for the fuel. There are already signs in several countries that drivers are getting back in their cars.
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Still, not everywhere is positive. Among the signs of weaker energy demand in India, oil shipments loaded for the nation’s public-sector refiners hit a seven-month low in April, according to analytics firm Vortexa. That slowdown marked “one of the first repurcussions” of the new Covid-19 wave, it said in a report.
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