Oil prices rose on Tuesday, heading for the fourth straight monthly gain, with investors betting on higher U.S. fuel demand as peak driving season arrived in the No. 1 oil consumer.
Data from market intelligence firm Genscape showed a drawdown of 686,700 barrels at the Cushing, Oklahoma delivery point for U.S. crude futures in the week to May 27, traders said, a report that provided further support to oil.
Strong U.S. consumer spending data also supported oil prices, despite concerns that a robust economy could encourage the Federal Reserve to raise interest rates soon. [.N]
The front month in U.S. crude’s West Texas Intermediate (WTI) futures CLc1 was up 65 cents, or 1.3 percent, at $49.98 a barrel by 12:37 p.m. EDT. WTI was headed for a 9 percent gain for May. On Thursday, it hit a seven-month high of $50.21.
Brent crude futures’ front-month LCOc1 showed a 27 cent, or 0.5 percent, gain at $50.03, ahead of expiry at Tuesday’s settlement. Brent hit a November peak of $50.51 on Thursday and was on track to end the month up 4 percent.
Investors brushed aside earlier concerns about higher Middle East output that had weighed on Brent, and a fight for market share between Saudi Arabia and Iran which gather with other OPEC members for a meeting on Thursday.
“The bulk of our technical indicators remain tilted in a bullish direction … with upside possibilities to the $52-52.50 areas still valid,” said Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch & Associates.
U.S. fuel demand is set to rise with the summer driving season that began with Monday’s Memorial Day holiday. Hedge funds and other money managers last week raised bullish bets on WTI to 2016 highs for a second week in a row as prices headed toward $50 a barrel.