Investing.com -- Crude futures surged 2% on Tuesday, amid indications of stronger demand growth in upcoming weeks, ahead of the release of the American Petroleum Institute's weekly inventory report after the close of trading.
On the New York Mercantile Exchange, WTI crude for June delivery traded in a broad range between $42.52 and $44.19 a barrel, before settling at $43.94, up $1.30 or 3.05% on the session. On the Intercontinental Exchange (ICE), brent crude for June delivery wavered between $44.16 and $45.82 a barrel, before closing at $45.51, up 1.19 or 2.69% on the session. Following the solid gains, oil prices worldwide are up by approximately 40% since falling to 12-year lows in mid-February. Crude futures are also up nearly 10% since talks at a closely-watched meeting in Doha ended prematurely after Saudi Arabia refused to freeze production at January levels, unless Iran also agreed to cap its output.
On Tuesday, oil price resumed their accent back toward 2016-yearly highs following a wave of bullish reports. In June, Saudi state-owned oil company Aramco will ship 730,000 barrels in storage in the Japanese prefecture of Okinawa to China's eastern province of Shandong, Reuters reported. At the same time, Citigroup Inc (NYSE:C) said in a note to investors that the Saudi kingdom could ramp up production by 500,000 bpd to accommodate the new sales. The added output would boost Saudi production to near all-time record highs, above 11 million barrels per day.
Any surges in global demand are viewed as bullish for oil, as supply continues to outstrip demand by more than 1 million bpd. It came one day after the Saudi cabinet approved a plan to offer a 5% stake in Aramco in an initial public offering valued as much as $2 trillion. The Aramco sale is an integral part of the kingdom's comprehensive plan to lessen its reliance on oil by 2030. In an interview with the Saudi state-owned al-Arabiya network, Saudi Prince Mohammed bin Salman indicated that national production can remain steady, even as the price of oil hovers around $30 a barrel.
Oil prices have remained persistently low since OPEC roiled global markets in November, 2014, with a coordinated effort to maintain its production ceiling above 30 million bpd. Months earlier, crude future prices peaked at $115 a barrel.
Investors await the release of the American Petroleum Institute weekly crude stockpile report on Tuesday evening for further signals on the supply-demand imbalance on domestic markets. Separately, Wednesday's government report could show that crude inventories nationwide rose by 2.3 million barrels last week. Earlier this week, global energy information provider Genscape, Inc. reported that stockpiles at the Cushing Oil Hub in Oklahoma rose by 1.5 million barrels for the week ending on April 22. Cushing, the nation's largest storage facility, is the main delivery point of NYMEX oil.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, lost more than 0.35% to an intraday low of 94.40. The index remains near eight-month lows. Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.