By Geoffrey Smith
Investing.com -- Crude oil prices rose on Tuesday as the International Monetary Fund validated bets on a solid recovery in demand this year by raising its forecasts for global economic growth.
By 9:40 AM ET (1440 GMT), U.S crude futures were up 0.4% at $53.00 a barrel, while the international benchmark Brent contract was up 0.4% at $55.96.
U.S. Gasoline RBOB Futures were up 1.3% at $1.5771 a gallon.
Earlier, the International Monetary Fund had revised its estimate for world GDP growth to 5.5% from 5.2% previously, reflecting in large part the more ambitious stimulus plans of the new U.S. administration and Congress. The IMF said the plans of President Joe Biden could raise U.S. GDP growth by another 1.25%. For 2022, it expects world growth of 4.2%. It also now thinks that the economy shrank by 3.5% last year, rather than the 4.4% it still expected in October.
The IMF's projections are based on the assumption of an average oil price of $50.03 a barrel this year, which would represent an increase of some 20% from last year. The IMF derives its forecasts from the futures curve rather than crunching its own numbers for oil.
In the near-term, however, the market still has to overcome a dip in consumption in Europe, which continues to struggle with new variants of the virus. Germany's Interior Minister said on Tuesday the country is looking at cutting international air arrivals to "almost zero" in its efforts to stop the new variants spreading in Europe's largest economy.
Elsewhere, the market was broadly calm, against a backdrop of what seems to be a gradual move back toward balance between supply and demand. The American Petroleum Institute will update the market later on that issue with its weekly assessment of U.S. crude and product stocks. A small rise of some 600,000 barrels in crude inventories is expected.
There was little reaction to news of explosions in the Saudi Arabian capital of Riyadh, while a strike over pay by Libyan oil facility guards, which some say could affect the country's exports if it turns more serious, is still the subject of negotiations.