U.S. crude oil rose more than 1% on Tuesday to top $81 per barrel, booking a second day of strong gains as this week’s rally continued.
West Texas Intermediate futures gained more than 2% on Monday, continuing last week’s advance despite mixed economic data out of China, the world’s largest importer of crude oil.
Oil rallied yesterday as retail sales for May in China topped economist forecasts, while industrial output and fixed asset investment disappointed. In a note to clients, Bob Yawger, executive director of energy futures at Mizuho Securities, cautioned that the rally in energy prices may largely be speculators covering short positions.
“It is axiomatic that if China is infected with an economic virus, the whole [world] would feel the repercussions. Yesterday was the exception that proved the rule,” Tamas Varga, an analyst with oil broker PVM, wrote in a note Tuesday.
Oil prices had recently declined partly because of a decision by OPEC+ members to start rolling barrels back onto the market in the fourth quarter.
“While the market has recovered nicely from the OPEC+ driven knee-jerk lower, there is still more relative concern about Q4 balances and beyond, which should serve as a resistance to major upside,” Ryan McKay, senior commodity strategist at TD Securities, told clients in a note Monday.
Now oil is rising as analysts see the market tightening in the third quarter on expectations that summer fuel demand will draw down inventories.
