Oil futures edged higher Tuesday, with the U.S. benchmark extending the previous session’s bounce, as investors weighed how quickly supply will rise to meet continued strength in demand.
West Texas Intermediate crude for December delivery CL00, +0.53% CLZ21, +0.53% rose 53 cents, or 0.7%, to $ 81.41 a barrel on the New York Mercantile Exchange. January Brent crude BRN00, +0.77% BRNF22, +0.77%, the global benchmark, was up 71 cents, or 0.9%, at $ 82.76 a barrel on ICE Futures Europe.
The International Energy Agency, in its monthly report, said the tight supply and demand balance in the global oil market could be set to ease. The IEA said it expects output to rise by 1.5 million barrels a day in the remainder of 2021, with the U.S., Saudi Arabia and Russia accounting for around half of that amount.
But bullish analysts said the outlook for crude remains supportive in the near term.
“Supply will grow more to meet demand as current prices provide the perfect environment for producers to increase output, it will just not happen immediately and that’s why the remainder of 2021 is bullish,” said Louise Dickson, senior oil market analyst at Rystad Energy, in a note.
Oil has seen three consecutive weekly declines, with recent weakness tied in part to the possibility that the Biden administration could tap the Strategic Petroleum Reserve in a bid to knock down high gasoline prices, though analysts said such a move could offer only a short-term fix.
Commodities Corner: Why tapping the SPR is one of many ‘bad’ options to ease gasoline prices
Meanwhile, natural gas futures jumped 3.3% to $ 5.272 per million British thermal units, tracking a rise in European prices after German regulators suspended the certification process for the Nord Stream 2 pipeline that would carry natural gas from Russia to Germany.