DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled Tuesday's session with solid gains, underpinned by an improved outlook for the global economy's recovery in 2021 after more than a year contending with a pandemic, led by turbocharged growth in the United States and an accelerated rollout of COVID-19 vaccinations in key emerging markets expected this summer. However, there are concerns over the second wave of infections in India, Latin America and Eurozone continue limiting the upside for the complex.

Oil futures gains faded in afternoon trade ahead of the weekly inventory report from the American Petroleum Institute on tap for a 4:30 p.m. EDT release that is expected to show drawdowns in crude and gasoline supplies but a build in distillate stocks. Analysts estimate U.S. commercial crude inventories likely fell 1.6 million barrels (bbl) in the week ended April 2 accompanied with a 900,000 bbl decrease in gasoline stocks.

Demand for gasoline has pushed higher in recent weeks, hitting a fresh six-month high 8.891 million barrels per day (bpd) during the final full week of March as states eased COVID-19 restrictions and businesses accelerated rehiring. The Energy Information Administration said on Tuesday domestic gasoline consumption will average 8.64 million bpd this year and accelerate further to 8.89 million bpd in 2022.

In distillate fuels, markets expect a modest build of 400,000 bbl in the reviewed week after inventories rose by 2.5 million bbl in the previous week to 144.1 million bbl. EIA lowered its 2021 distillate demand projections to 4.05 million bpd despite seeing higher economic growth this year.

International Monetary Fund said on Tuesday it expects a stronger post-pandemic recovery this year, propelled by the latest round of fiscal stimulus in the United States along with expectations for a faster vaccine rollout in key global economies this summer. Looking ahead, global growth this year is seen at 6%, up 0.5% from the previous forecast. Next year, global GDP growth is seen increasing 4.4%, higher than an earlier estimate of 4.2%.

"Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible," IMF Chief Economist Gita Gopinath said in the latest World Economic Outlook report.

Nonetheless, the outlook offers caution over the daunting challenges related to divergences in the speed of the recovery and trajectory of the pandemic among the different parts of the global economy. India -- a country of some 1.4 billion people -- is now facing the second wave of infections triggered by a so-called "double-mutant" variant of the coronavirus, E484Q and L452R, believed to be more transmittable and evading the body's natural defenses.

"COVID-19 cases in India are rising very different from a year ago when the rate of increase seemed a lot less rapid," said Ramanan Laxminarayan of the Center for Disease Dynamics, Economics and Policy in New Delhi.

At settlement, NYMEX May West Texas Intermediate futures recouped 68 cents to $59.33 bbl and the June Brent contract on ICE gained 59 cents to finish just below $63 bbl at $62.74 bbl. Both contracts fell more than 4% on Monday. NYMEX May ULSD futures faded some of Tuesday's gains to settle at $1.7941 gallon, still up 2.17 cents from Monday's settlement, and NYMEX May RBOB futures edged 0.52 cents higher to $1.9663 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com