Oil prices rise on optimism easing of lockdowns to spur fuel demand

By Sonali Paul
MELBOURNE, June 9 (Reuters) - Oil prices climbed on Tuesday,
paring losses from the previous session, as markets broadly rose
on growing confidence in a global recovery with pandemic
lockdowns easing.
U.S. West Texas Intermediate (WTI) crude CLc1 futures rose
1.3%, or 50 cents, to $38.69 a barrel at 0134 GMT, after
dropping by $1.36 on Monday.
Brent crude LCOc1 futures rose 1.4%, or 56 cents, to
$41.36 a barrel. The benchmark contract fell $1.50 on Monday,
snapping a seven-day streak of gains.
"With Brent holding very nicely above $40, there's talk
among traders that WTI will test that level soon," said Michael
McCarthy, chief market strategist at CMC Markets.
New York City, the U.S. city hardest hit by the novel
coronavirus outbreak, began reopening on Monday after about
three months, in a sign that life is returning to pre-outbreak
routines that could spur fuel demand to return. U.S. crude stockpiles are estimated to have fallen by 1.5
million barrels last week, a preliminary Reuters poll showed
ahead of a report from the American Petroleum Institute industry
group later on Tuesday. Six analysts estimated gasoline inventories fell by about
100,000 barrels in the week to June 5. However, they expect
distillate stocks, including diesel and heating oil, rose by 2.9
million barrels.
"You've got demand recovering gradually but steadily.
However there's still massive excess supply, so OPEC and friends
need to control barrels coming into the market. But that's
tough," said Lachlan Shaw, head of commodity research at
National Australia Bank.
The Organization of the Petroleum Exporting Countries
(OPEC), Russia and other producers, a grouping called OPEC+, on
Saturday agreed a one month extension through July of a record
9.7 million barrels per day output cut.
However, Saudi Arabia said on Monday the kingdom and its
allies Kuwait and the United Arab Emirates would not extend an
additional 1.18 million bpd in cuts on top of the OPEC+ cuts in
July. At the same time, Libya, which has been out of the market
since January, has resumed producing. "That profile of how supply restarts and how it marries up
to demand growing, that's going to be the tightrope the market
has to walk in coming months and probably into next year," said
Shaw.