- US crude rises above $60/barrel, while Brent trades above $66/barrel.
- OPEC raises 2015 global demand outlook to 1.18 million bpd from 1.17 bpd last month.
- Saudi-led coalition continues to pound Yemen just hours after before a 5-day truce began.
The price of crude oil rose on Tuesday after OPEC raised its demand outlook, signaling that the global supply glut may be dissipating despite record production in the United States.
Brent crude for June delivery climbed 2.6 percent or $1.66 to $66.57 a barrel at 12: 53 ET. Brent crude approached $70 a barrel last week, its highest level of the year.
US crude was back above $60 a barrel on Tuesday, trimming its discount to the global benchmark to around $6. West Texas Intermediate (WTI) climbed 2.2 percent or $1.31 to $60.56 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC) raised its 2015 global demand outlook to 1.18 million barrels per day compared to last month’s estimate of 1.17 million barrels. The 12-member oil cartel signaled that global daily demand would reach 92.5 million barrels this year.
Meanwhile, the US government on Tuesday also raised its yearly outlook on US oil demand to 340,000 barrels per day from 330,000 last month. The US Energy Information Administration (EIA) had previously slashed its 2016 demand outlook to 70,000 barrels per day from 90,000.
On Wednesday the EIA will release weekly data on US oil inventories. Inventory levels dropped last week for the first time in four months, which sent oil prices to new 2015 highs. US commercial crude inventories fell by 3.9 million barrels last week to 487 million, EIA data showed.
Ongoing Conflict in Yemen
Saudi Arabia’s ongoing involvement in Yemen has kept oil prices elevated in recent weeks. Riyadh continued its aerial campaign targeting Houthi rebels on Tuesday, striking the capital Sanaa just hours before a five-day truce was to be implemented. While not a major oil producer, Yemen controls a strategic passageway connecting the Red Sea and Suez Canal.