Oil prices were broadly higher on Tuesday afternoon in Asia as traders remained optimistic that continued economic reopening in countries around the world would increase demand and that adherence to supply cuts would help reduce the supply glut that has pushed prices down in recent months. On Monday, Russia reported that its oil output dropped to its target of 8.5 million barrels per day for May and June in compliance with its commitment to OPEC. The group will meet again next month to discuss its continuing efforts to bolster prices.
U.S. WTI was up 3.25 percent as of 12:48 p.m. HK/SIN, while Brent crude futures were up 1.72 percent to $36.15 per barrel. Oil prices are still down around 45 percent since the start of 2020. Still, WTI prices have rallied over 70 percent in May, putting the commodity on track for its best month in history. According to CNBC analysts, May's steep price increases were partially caused by the historic low from which WTI bounced. Analysts expect oil prices to remain volatile as fears of a second wave of the coronavirus could reduce demand at some point in the future, and ongoing tensions between the U.S. and China could hinder international trade and reduce demand.
Despite the momentum in the oil markets this month, some analysts remain skeptical that it will continue, and argue that $40 per barrel prices aren't likely to be seen before the end of June. One such analyst is Forbes analyst Gaurav Sharma, who argues that there are still many roadblocks to overcome before prices can breech that significant level. He argues that China's demand is up and that Beijing's imports are currently averaging 13 million barrels per day, but this will change quickly if sanctions are imposed on China or the trade deal between China and the U.S. crumbles.
Currency Movements
The optimism about economic reopening that has fueled oil prices had a converse reaction for the U.S. dollar, and the safe-haven fell on Tuesday afternoon as investor optimism increased risk appetite. The greenback was lower against a basket of its primary trading partners, with the dollar index falling 0.24 percent to 99.62 .DXY. The dollar edged higher against the yen, up 0.14 percent to 107.84, but it fell against the euro and the pound. The greenback was also lower against the Australian and Canadian dollars.
The pound gained 0.3 percent against the dollar to trade at $1.222, while the euro was up 0.17 percent to $1.082. The Australian dollar surged 0.43 percent to $0.657.