Oil rose on Tuesday to hit $70 a barrel for the first time since March before paring gains, lifted by expectations of demand recovery after the reopening of European and US economies offset concern over spreading coronavirus cases in Asia.
Britain further eased coronavirus restrictions on Monday and Europe is starting to reopen cities and beaches. New cases in the United States continued to fall and New York lifted the mask requirement for vaccinated people.
Brent crude topped $70 for the first time since March 15 and by 1340 GMT was up $0.1, or 0.1%, at $69.56 a barrel. US West Texas Intermediate (WTI) crude eased $0.24, or 0.4%, to $66.03.
“Economies are again switching a gear higher,” said Tamas Varga of broker PVM. “The euphoria is reflected in the general belief that the economic revival will soon be coupled with oil demand recovery.”
The latest gain to $70 brings Brent’s rally this year to 35%, supported by supply cuts by the Organisation of the Petroleum Exporting Countries (OPEC) and allies. This could lead to further advance, some analysts said.
“A rise through $70 should trigger more systematic buying and see it advance to $71.50 a barrel quite quickly,” said Jeffrey Halley, analyst at brokerage Oanda.
European and US progress in the battle against the pandemic contrasts with the situation in Asia, which is limiting oil’s rally.
Singapore and Taiwan have reinstated lockdown measures and India has experienced a plunge in fuel demand after imposing restrictions to curb infections.
Also limiting oil’s upside is the prospect of a revival of Iran’s nuclear deal, which would allow the OPEC producer to restart exports fully.
In focus later will be this week’s US supply reports, expected to show a 1.7-million-barrel rise in crude inventories. The American Petroleum Institute’s report is due at 2030 GMT.