Oil prices escalate as coronavirus lockdown ease worldwide

Oil prices escalated on Tuesday after the easing of coronavirus lockdown measures across the globe.

According to reports, easing of restrictions worldwide lifted trader hopes for a swift recovery in demand.

Brent crude futures rose 0.3%, or 14 cents, by 0435 GMT to $40.94 a barrel. The benchmark contract had fallen $1.50 on Monday, snapping a seven-day streak of gains.

U.S. West Texas Intermediate (WTI) crude futures rose 0.7%, or 26 cents, to $38.45 a barrel, after dropping by $1.36 on Monday.

“With Brent holding very nicely above $40, there’s talk among traders that WTI will test that level soon,” said Michael McCarthy, market strategist.

Goldman Sachs has also raised its 2020 oil price forecasts, with Brent now seen at $40.40 a barrel and WTI at $36 a barrel.

Tuesday’s profits came as New York, the U.S. city hardest hit by the novel coronavirus outbreak, began reopening on Monday after about three months, potentially spurring fuel demand.

U.S. crude and gasoline inventories are expected to have fallen by 1.5 million barrels and about 100,000 barrels respectively in the week to June 5, a preliminary Reuters poll showed ahead of a report from the American Petroleum Institute industry group later on Tuesday.

The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, a grouping known as OPEC+, on Saturday agreed a one-month extension through July of a record 9.7 million barrels per day output cut.

However, Saudi Arabia said on Monday the kingdom and its allies Kuwait and the United Arab Emirates would not extend an additional 1.18 million bpd in cuts on top of the OPEC+ cuts in July.