Oil rises on day two on signs of a strong recovery in fuel demand

© Reuters. FILE PHOTO: Oil and gas tanks are seen in an oil storage facility in a port in Zhuhai, China, October 22, 2018. REUTERS / Aly Song / File Photo

From Sonali Paul

MELBOURNE (Reuters) – Oil prices rose a second day on Wednesday amid signs of strong fuel demand in Europe, while the prospect of a near-term return of Iranian oil supply dwindled as the U.S. Secretary of State said sanctions against Tehran were unlikely to be increased.

Futures rose 15 cents, or 0.2%, to $ 72.37 a barrel at 0131 GMT, and previously rose to $ 72.58, the highest level since May 20, 2019. Brent rose 1% on Tuesday.

US crude oil futures West Texas Intermediate (WTI) rose 20 cents, or 0.3%, to $ 70.25 a barrel after rising to $ 70.42, the highest since October 17, 2018. The Prices rose 1.2% on Tuesday.

The market will be boosted by solid prospects for fuel demand growth as travel restrictions in Europe are lifted and more people are vaccinated.

“Recent traffic data suggests that when restrictions wear off, travelers take to the streets,” ANZ Research analysts said in a note, pointing to TomTom data that showed traffic congestion in 15 European cities was the highest since Had reached the beginning of the coronavirus pandemic.

“The surge in demand is expected to be strong,” said ANZ analysts.

On Tuesday, the US Energy Information Administration in the United States, the world’s largest consumer of oil, predicted fuel consumption growth of 1.49 million barrels per day (bpd) this year, up from an earlier forecast of 1.39 million bpd.

As another positive sign, industry data showed that {{8849 | US crude inventories fell in line with analyst expectations, according to a Reuters poll last week.

The American Petroleum Institute reported that crude oil inventories fell 2.1 million barrels for the week ending June 4, two market sources said, citing the data. [API/S]

The US Energy Information Administration inventory data is due on Wednesday at 1430 GMT.

Share price gains had been capped in recent weeks as oil investors assumed sanctions on Iranian exports would be lifted and oil supplies increased this year as Iran talks with the Western powers on a nuclear deal.

However, US Secretary of State Antony Blinken said Tuesday that even if Iran and the US were to resume a nuclear deal, hundreds of US sanctions against Tehran would remain in place.

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