Oil prices climbed about 3% on Tuesday on signs of higher demand in Europe and China, lower production in the U.S., tensions in the Middle East and as buyers emerged the day after prices fell to a four-year low.
Brent futures rose $1.92, or 3.2%, to settle at $62.15 a barrel, while U.S. West Texas Intermediate (WTI) crude gained $1.96, or 3.4%, to close at $59.09.
Both benchmarks rose out of technically oversold territory, the day after posting their lowest settlements since February 2021 on a decision by OPEC+ to boost output.
“The market may be seeing some bottom fishing with a significant amount of profit taking out of short holdings, a major contributor to today’s price rebound,” analysts at energy advisory firm Ritterbusch and Associates said.
OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, decided over the weekend to speed up oil production hikes for a second consecutive month.
“After evaluating the latest OPEC+ move to accelerate the easing of supply cuts, market players are focusing on developments in trade and the possibility … that trade deals will be reached,” said Tamas Varga, an analyst at PVM, a brokerage and consulting firm that is part of TP ICAP.
Read also: EU to propose end-2027 halt to all Russian gas imports
Varga also pointed to the rise in geopolitical risk premium in the Middle East as Israel struck Iran-backed Houthi targets in Yemen as a retaliation for an assault on Ben Gurion airport.
U.S. President Donald Trump, however, said the U.S. will stop bombing the Houthis in Yemen, saying that the group had agreed to stop interrupting important shipping lanes in the Middle East.
Prices also drew support after consumers in China increased spending during the May Day celebration and as market participants returned after the five-day holiday.
The U.S. dollar fell to a one-week low against a basket of currencies as investors grew impatient about trade deals. A weaker U.S. currency makes dollar-priced oil less expensive for buyers using other currencies.
In addition, lower oil prices in recent weeks have prompted some U.S. energy firms like Diamondback Energy and Coterra Energy to announce that they would cut some rigs, which analysts said should over time increase prices by reducing output.
Ahead of weekly U.S. oil inventory data, analysts forecast crude stockpiles fell about 800,000 barrels last week.
