The oil prices rose on Tuesday, reversing a drop of more than 2% in the session, as markets weighed the US government’s plans to refill the oil reserve emergency in the country and in anticipation of increased seasonal demand.
The crude Brent rose 43 cents, or 0.56%, to $77.44 a barrel, while the West Texas Intermediate (WTI) in the United States gained 55 cents, or 0.75%, to $73.71.
Plans by the Joe Biden administration to start buying crude to replenish the Strategic Petroleum Reserve helped cover speculative short positions, said Robert Yawger, chief executive of energy futures at Mizuho.
Energy Secretary Jennifer Granholm said the administration could start buying crude for the Strategic Petroleum Reserve this year after Biden ordered the biggest sale yet last year.
A report from the Energy Information Management (EIA) pointing to higher seasonal demand and lower-than-expected production also supported prices.
“We expect the seasonal rise in oil consumption and a drop in OPEC crude production to put some upward pressure on crude prices in the coming months,” the Energy Information Administration said in its Energy Outlook to Short term.
The EIA also forecasts US crude production to rise 5.1% to 12.53 million barrels a day this year, but cut its output estimate for this year and next from earlier forecasts.
It cut its estimate for Brent and crude oil prices. WTI by more than 7% each to $78.65 and $73.62 per barrel, respectively.
Both benchmarks had fallen around 2.5% earlier after two days of gains.
Prices were dampened by data showing imports from China contracted in April, while exports rose at a slower pace, implying weak domestic demand.
Markets were also watching comments from President Biden and top Republican lawmakers about raising the US debt ceiling to $31.4 trillion, fearing an unprecedented default if Congress fails to act in three weeks.
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