By Yasin Ebrahim
Investing.com - Oil prices settled higher Monday, supported by renewed bets on a recovery in energy demand as the U.S. reopening picks up speed ahead of the summer driving season.
On the New York Mercantile Exchange, crude futures for June delivery rose 1.43% to settle at $64.49 a barrel, while on London's Intercontinental Exchange (NYSE:ICE), Brent rose 1.22% to trade at $67.58 a barrel.
"Crude oil prices rallied as signs of further strength in demand continue to emerge. The emergence of several US cities from lockdown is stoking confidence of stronger demand in gasoline ahead of the key US summer driving season," ANZ Research said in a note.
The renewed optimism ahead of the summer driving season, a period in which gasoline demand is typically at its seasonal peak, is helping to offset concerns over a strong record of daily Covid-19 infections in India, the third latest oil consuming country.
"This renewed optimism is overshadowing headwinds in India, where a second wave of infections of COVID-19 are resulting in new travel restrictions being put in place. Domestic demand has been hit so hard that Indian refiners are now looking to export fuel exports," ANZ added.
As well as hopes for stronger recovery in demand, a fall in the dollar also supported an uptick in oil prices.
Dollar-denominated assets such as oil are sensitive to moves in the dollar – a drop in the dollar makes gold more affordable for holders of foreign currency and thus increases demand for the precious metal.
The upbeat start to the month for U.S. oil prices comes after a 13% rally last month despite lingering concerns over the increase in Iranian production.
Over the weekend, Iran said it expects to export as much as 2.5 million barrels of oil should nuclear deal talks with the U.S. and other nations lead to removal of restrictions against the Islamic Republic.
"If Iranian oil exports, which the country’s vice president estimates at 2.5 million barrels per day, were to return to the market, this would likely put pressure on oil prices," Commerzbank (DE:CBKG) said in note.