Oil futures rose Tuesday, finding support as traders turned their attention to easing COVID-19 restrictions in the U.S. and Europe.
West Texas Intermediate crude for June delivery
the global benchmark, was up 83 cents, or 1.2%, at $68.39 a barrel on ICE Futures Europe.
“Investors remain squarely focused on reopening optimism this week amid hopes that the easing of lockdown restrictions in the U.S. and Europe will result in a rise in fuel demand,” said Sophie Griffiths, market analyst at Oanda, in a note.
The European Commission on Monday proposed welcoming fully COVID-19-vaccinated travelers and tourists from countries with “a good epidemiological situation.” European airline shares jumped.
In the U.S., several states began lifting or announced plans to lift or ease lockdown restrictions. The average number of new cases in the U.S. fell below 50,000 a day for the first time since October. Nearly 1.67 million people were screened at U.S. airport checkpoints on Sunday, according to the Transportation Security Administration, the highest number since mid-March of last year.
“Europe’s plans to curb travel restrictions is music to the ears of oil bulls. When added to Fed Chair Powell’s comments that the U.S. economic recovery is making real progress, this is supportive of higher oil prices,” Griffiths wrote.
The improving picture in the U.S. and Europe stands in contrast to India, the world’s third-largest oil importer, where a deadly surge in COVID cases has yet to let up. Indian hospitals remain overwhelmed by cases and lacking in supplies including oxygen.
“For now, the market has moved past India and is focused on U.S. and European reopening. However, we know the COVID picture is fluid and could keep gains in oil capped,” Griffiths said.