Oil futures continued trading higher on Tuesday, besting marks not seen since last year, according to Bloomberg Marketwatch.
July West Texas Intermediate crude added 67 cents, or 1.4%, on the New York Mercantile Exchange to end trading at $50.36 a barrel.
August Brent crude, the global benchmark, tacked on 89 cents, or 1.8%, to settle at $51.44 a barrel on London’s ICE Futures Exchange, registering its best since Oct. 9.
“The main reason for oil’s move is expectations of a tighter market in the second half of the year,” said Fawad Razaqzada, technical analyst at Forex.com and City Index. “People are so focused on the supply side that they forget the demand side of the equation [in crude oil],” said Razaqzada.
He estimates that WTI could hit $55 a barrel, while Brent could reach around $56. WTI crude is up more than 90% since hitting a low on Feb. 11, while Brent has gained 70% over the same period.
A monthly report from the U.S. Energy Information Administration released on Tuesday raised the agency’s WTI and Brent price forecasts and left its U.S. output forecasts unchanged for 2016 and 2017, according to the Bloomberg report.
“Low oil prices continue to cut into domestic oil production, with U.S. monthly oil output not expected to start steadily increasing until the end of 2017,” said EIA Administrator Adam Seiminski.
The American Petroleum Institute reported late Tuesday that U.S. crude oil inventories fell by 3.6 million barrels for the week ended June 3, according to sources who reviewed the report. The EIA weekly report is due on Wednesday.
Meanwhile, July natural gas futures ended almost a penny higher at $2.474 per million British thermal units on Tuesday’s New York Mercantile Exchange, eclipsing the last record high of October 20. Overall, natural gas prices have registered an increase of 10.6% since last week.
U.S. natural gas inventories remain close to 2.907 trillion cubic feet as of May 27, which is 32% above last year, according to the EIA. It is anticipated that natural gas inventories will rise to 4.161 trillion cubic feet by the end of October.
Natural gas prices are expected to average $2.22 per million British thermal units this year, rising to an average of $2.96 for 2017, according to the EIA.
