Oil prices continued to climb on Tuesday with investors expecting a tighter market led by a seasonal rise in gasoline demand and supply cuts from OPEC+ producers, though concerns over the risk of a U.S. debt default capped gains.
Brent crude futures rose 35 cents to $76.34 a barrel while U.S. West Texas Intermediate (WTI) crude was at $72.41 a barrel, up 36 cents, or 0.50%.
It was the second day of gains after Brent rose 0.5% on Monday. WTI gained 0.6%, amid a 2.8% increase in U.S. gasoline futures ahead of the Memorial Day holiday on May 29 that traditionally marks the start of the peak summer fuel demand season.
According to Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, oil prices are consolidating their bottoms, aided by a seasonal increase in US gasoline demand beginning next week, OPEC+ production cuts beginning this month, and planned US purchases to replenish the Strategic Petroleum Reserve (SPR).
Last week, the U.S. Department of Energy said it would buy 3 million barrels of crude oil to replenish the SPR for delivery in August.
Voluntary production cuts by the Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, that went into effect this month are also expected to keep oil markets tight.
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