Oil futures hit 7-week highs on demand-recovery optimism

London (Quantum Commodity Intelligence) – Crude oil futures reached seven-week highs in London and New York Tuesday, fueled by fresh optimism that demand growth is back on track, particularly in the US and Europe as travel restrictions ease.

The rollout of the US vaccine program has led to more US states announcing an easing of restrictions, which is viewed as bullish for gasoline ahead of the summer driving season.

Brent futures for July were trading at $68.54/barrel in late afternoon London (1715 GMT), having reached a session peak of $69.04. Prices were up $0.98/b on the day, an increase of 1.45%. Brent last traded at this level in mid-March.

At the same time, June WTI was trading at $65.44/b, up $0.96/b on the day, or 1.49%. WTI reached a 7-week high of $65.85/b earlier on the session.

Meanwhile, the number of commercial flights in European airspace hit a one-year high last week, and April recorded the highest average number of daily flights over a month since November, data from Eurocontrol, the aviation safety agency, showed this week.

The vaccine roll-out and improvement in global oil demand this year will also increase refinery production of jet, which was pared to the bone last year as the aviation industry grounded fleets of planes amid lockdowns.

Last week, US investment bank Goldman Sachs said it expects Brent prices to reach $80/b over the next six months while seeing WTI at $77/b over the same time period.