Oil's weekly spike has OPEC anticipating demand rebound

Oil closed at the highest in over a week after OPEC boosted its expectation for this year's demand recovery, while signs continue to emerge of rising fuel consumption in parts of the world.

Futures rose 0.8 per cent in New York on Tuesday, settling above US$60 a barrel for the first time since early April. OPEC raised its forecast for oil consumption by 190,000 barrels a day for 2021, though lowered its outlook for the second quarter.

Traders are also watching for signs of a demand rebound in the U.S., the world's top oil-consuming country. In New York City, toll bridges and tunnels are on pace for the busiest April in seven years. At the same time, inflation data showed the biggest increase since 2012.

“There's going to be tremendous pent-up demand for crude,” said Edward Moya, senior market analyst at Oanda Corp. “There are some areas that are seeing cases trend higher, but the restrictions are going to be short-lived as vaccines get distributed.”

Prices were static after the American Petroleum Institute was said to report U.S. crude stockpiles fell by 3.61 million barrels last week, which would be the third straight weekly drawdown if confirmed by the U.S. government on Wednesday.

Despite signs travel demand is starting to materialize, prices have yet to break out of the narrow trading range they've been stuck in since mid-March. A measure of market volatility slumped to the lowest since February for West Texas Intermediate futures, while aggregate trading volume in the benchmark remained below its 15-day moving average for a seventh straight session.

The market is still contending with spreading near-term demand concerns because of the resurgence of the virus. Meanwhile, U.S. health officials called for an immediate pause in use of Johnson & Johnson's single-dose COVID-19 vaccine on worries over a rare and severe form of blood clotting.