Oil gained more than $1.50 per barrel on Tuesday, rebounding on technical factors and bargain hunting.
Although concerns about a market surplus persisted, the increase was fueled after a decision by OPEC+ to boost output sent prices down in the previous session,
Brent crude futures rose $1.67, or 2.8%, to $61.90 a barrel by 0927 GMT, the first gain after six consecutive declines, while U.S. West Texas Intermediate crude added $1.61, or 2.8%, to $58.74 a barrel. Both benchmarks had settled at their lowest since February 2021 on Monday, driven by an OPEC+ decision over the weekend to further speed up oil production hikes for a second consecutive month.
On the other hand, the price of the OPEC basket of twelve crudes stood at $61,80 a barrel on Friday, compared with $61,88 the previous day, according to OPEC Secretariat calculations.
Driven by expectations that production will exceed consumption, oil has lost over 10% in six straight sessions and dipped over 20% since April, when U.S. President Donald Trump’s tariff shocks prompted increased bets on a slowdown in the global economy.
The return of Chinese market participants after a five-day public holiday since May 1 was also seen supporting prices on Tuesday.
Also lending some support were Saudi Arabia’s latest official selling prices for its oil, Giovanni Staunovo, commodities analyst at UBS, told Reuters. The prices were cut modestly.
“They don’t show much of a fight for market share. It’s still a modest unwinding of the [OPEC+] cuts,” Staunovo said. “This will have readjusted some expectations.”
A data release showed a pick-up in the services sector’s growth in the U.S., the world’s major oil consumer, as orders increased.
The Institute for Supply Management (ISM) said on Monday its non-manufacturing purchasing managers index (PMI) increased to 51.6 last month from 50.8 in March. Economists polled by Reuters had forecast the services PMI dipping to 50.2.
The U.S. Federal Reserve will likely leave interest rates unchanged on Wednesday as tariffs roil the economic outlook.
“Today’s slight rebound in oil prices appears more technical than fundamental,” said Yeap Jun Rong, a market strategist at IG. “Persistent headwinds, including a pivotal shift in OPEC+ production strategy, uncertain demand amid U.S. tariff risks, and price forecast downgrades, are continuing to weigh on the broader price movement.”
Barclays lowered its Brent crude forecast on Monday by $4 to $70 a barrel for 2025 and set its 2026 estimate at $62 a barrel, citing “a rocky road ahead for fundamentals” amid escalating trade tensions and OPEC+’s pivot in its production strategy.
