Oil prices hit on Tuesday a fresh six-month high, nearing $60 a barrel, as traders bet that the signs of economic “green shoots” will boost demand. The move attracted fresh speculative buying, lifting prices even higher.
The rise in oil prices drove a broader commodities prices surge, with agricultural commodities rising ahead of a key supply and demand update from the US government, due out later in the session.
Nymex June West Texas Intermediate rose to an intraday high of $59.68 a barrel, up almost 85 per cent from the February’s low of $32.7 a barrel. In afternoon trading, WTI was 80 cents higher to $59.33 a barrel. ICE June Brent rose to $58.44 a barrel.
“Recent price strength is not based on fundamentals, but on financial flows,” said Mike Wittner, a senior oil analyst at Société Générale in London. He said that investors’ appetite for riskier asset classes such as commodities was “better entrenched, and more sustainable” than earlier this year.
The increase in oil prices comes ahead of an Opec meeting later this month, when the oil cartel will discuss whether to deepen its production cuts, as argued by countries such as Iran, or keep supply unchanged, as proposed by Algeria.
Opec, which will meet on May 28 in Vienna, has removed about 85 per cent of its promised cut of 4.2m barrels a day from its last September level.