U.S. Oil Closes at 2018 High Amid Hopes of Pickup in Gasoline Demand

© Reuters.

By Barani Krishnan

Investing.com – U.S. oil prices closed at their highest since 2018 on Tuesday ahead of the release of industry data that market bulls hope will show a decent drawdown in gasoline last week to match the hype of a rally driven by expectations more than real numbers of fuel demand.

, the benchmark for U.S. oil, settled up $1.24, or 1.8%, at $72.12 per barrel. It earlier hit a session peak of  $72.28. Both that peak and Tuesday’s settlement were the highest since October 2018.

, which acts as the global benchmark for oil, settled up $1.13, or 1.6%, at $73.99. Brent earlier rose to a session peak of $74.13,  the highest for a day since April 2019. 

Oil prices have been on a tear lately amid projections for one of the biggest ever summer demand periods for fuel in the U.S. as the country reopens fully from Covid-19 lockdowns.

The International Energy Agency, which represents the interests of Western oil consumers, said in its monthly report that global producers would need to boost output to meet demand set to recover to pre-pandemic levels by the end of 2022.

Despite the optimism over global oil demand, U.S. gasoline take-up has been tepid since the May 31 Memorial Day that marked the start of the peak summer driving period in the world’s largest oil consuming country. That suggests to some that more time was probably needed for U.S. fuel demand to accelerate.

The problem was particularly highlighted by the U.S. Energy Information Administration’s Petroleum Status Report for the week ended June 4, which showed a 7.05-million barrel build in gasoline inventories versus analysts’  expectations for a rise of just about 1.2 million barrels.

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Tuesday’s rally in WTI and Brent came ahead of a weekly snapshot on U.S. oil supply-demand due from the API, or American Petroleum Institute.

The API snapshot, scheduled for release at 4:30 PM ET (20:30 GMT), comes before Wednesday’s update of the Petroleum Status Report by the EIA.

According to a consensus of analysts tracked by Investing.com, U.S. likely fell by 3.3 million barrels last week, versus the drop of 5.2 million in the previous week to June 4.

likely rose by 614,000 barrels versus the rise of 7.05 million in the prior week, consensus shows.

And stockpiles of , made up of diesel and , likely increased by 186,000 barrels last week after growing by 4.4 million the week before.

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