Oil prices increased on Tuesday as investors expected a tighter market due to seasonal gasoline demand and OPEC+ output cuts; however, concerns over a U.S. debt default limited gains.
Brent crude futures rose 27 cents, or 0.36%, to $76.26 a barrel by 10.49 A.M. Bangkok time, while U.S. West Texas Intermediate (WTI) crude was at $72.34 a barrel, up 29 cents, or 0.40%.
“Oil prices are consolidating their bottoms,” said Nissan Securities unit NS Trading head Hiroyuki Kikukawa. “This is being supported by a seasonal increase in U.S. gasoline demand from next week, production cuts by OPEC+ from this month, and planned U.S. purchases to refill the Strategic Petroleum Reserve (SPR).”
“But worries over the U.S. debt ceiling talks and a possible further hike in U.S. interest rates limited gains,” he added.
Oil markets are projected to remain tight due to voluntary production reductions by OPEC+.
The analysts at Goldman Sachs said in a report released on Monday that they “expect sustained (oil supply) deficits from June as OPEC+ production cuts fully realize and demand rises further.”
A Vitol official predicted on Monday that oil demand would increase by roughly 2 million barrels per day (bpd) in the second half of 2023, with Asia serving as the region’s primary driver.
Investors are also keeping an eye on talks about raising the debt ceiling of the U.S.