WASHINGTON (DTN) -- In market-on-close trade Tuesday, crude futures on the New York Mercantile Exchange and Intercontinental Exchange rallied more than 1.5%, with gains accelerating post-settlement after the Organization of the Petroleum Exporting Countries and nine partners outside of the cartel, including Russia, reaffirmed their support for gradually easing production cuts beginning next week, signaling a recovery in global oil demand is still underway despite a resurgent virus in parts of Asia and Latin America.
On the session, NYMEX June West Texas Intermediate futures rallied $1.03 to settle just below $63 barrel (bbl) at $62.94, and ICE June Brent futures advanced $0.77 for a $66.42 bbl settlement. Next-month delivery July ICE Brent futures maintained $0.45 discount to the expiring contact. NYMEX May ULSD futures surged 2.72 cents to settle at $1.9057 gallon, with next-month delivery contact holding a marginal 0.14 cents premium. NYMEX May RBOB futures rallied 4.18 cents or 2.45% to $2.0204 gallon and the June contact settle at $2.0288 gallon.
The OPEC+ Joint Ministerial Monitoring Committee concluded on Tuesday with no adjustments made to the ongoing production agreement reached on April 1, meaning producers will lift output cuts by 350,000 barrels per day (bpd) in both May and June followed by a 450,000 bpd increase in July. The alliance had been holding back around 8 million bpd of output, 1 million bpd of which represented Saudi Arabia's additional voluntary cut. The Saudis also said earlier this month that they planned to ease their voluntary cut over the three-month period.
"The meeting highlighted the continuing recovery in the global economy, supported by unprecedented levels of monetary and fiscal support, while noting that the recovery is expected to pick up speed in the second half of the year," OPEC+ said in their statement released Tuesday.
A number of participants to the agreement, nevertheless, expressed concern over the rise in COVID-19 infections in parts of Asia -- a key region for global oil demand growth. In particular, India has been hit hard by the vicious resurgence of virus cases, prompting lockdowns in the nation's most populous cities and states. S&P Platts estimates India's fuel demand might be cut by 9% this year, with largest refineries already reducing run rates.
Despite the worrisome development, the meeting observed continued destocking trend of commercial inventories held by the Organization for Economic Cooperation and Development but noted that they increased by 14.4 million bbl in March and were 77.4 million bbl above the 2015-2019 average.
Separately, U.S. crude oil stockpiles are expected to have decreased by a marginal 100,000 bbl in the week ended April 23, while gasoline inventories are seen to have risen by 200,000 bbl from the previous week, according to analysts. Stocks of distillates are expected to fall by 100,000 bbl from the previous week. Refinery use likely rose by 0.5 percentage point to 85.5% of capacity.
The closely watched inventory report from the American Petroleum Institute is scheduled for release at 4:30 p.m. EDT.
Liubov Georges can be reached at firstname.lastname@example.org