WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange strengthened Tuesday, with traders boosting the U.S. crude benchmark above $65 barrel (bbl) as early reopenings of large gasoline consuming states in the U.S. Northeast joined improved macroeconomic data in the European Union to spur hopes for stronger summer demand for both diesel and gasoline while offsetting concerns over consumption drops in India and elsewhere in Asia-Pacific.
In a major boost for international air travel, the European Union proposed plans to allow entry into the bloc for fully vaccinated travelers as early as this month. If approved, the new rule would replace a ban on all nonessential travel to the EU. This certainly bodes well for jet fuel demand that's been battered by the pandemic.
The European Union saw a sharp pick-up in vaccination rates in recent weeks, with France and Germany now administering more daily doses than the United States. France's latest inoculation rate stands at 2.8 million doses a day compared with the 2.2 million doses domestically.
The drop-off in vaccinations prompted the White House on Tuesday to revise its immunization target to 70% of adult Americans having at least one coronavirus vaccine by July 4th. Media airwaves were hit with reports Tuesday indicating the White House plans to redistribute unused jabs from the states that showed little interest in the vaccine, raising concerns that pockets of the country might be left out from vaccination efforts.
The slowing inoculation rate nationwide, however, did not derail plans to reopen large Northeastern states. The timeline to lift all capacity limits in New York, New Jersey, and Connecticut -- major gasoline consuming states -- was moved forward to May 19 from July 1. Recent data from the U.S. Energy Information showed four-week average gasoline demand in the United States has already reached the highest level since late August 2020 at 8.827 million barrels per day (bpd).
Tuesday's gains in the oil complex were underpinned by expectations for stronger fuel demand this summer, although offset by an ongoing surge in coronavirus cases in India, the world's third largest oil consumer. The country saw 392,488 new COVID-19 infections and a record 3,689 deaths on May 1, data from John Hopkins University showed, even as parts of the country remained under lockdown.
Separately, U.S. crude oil stockpiles expected to decrease by 2 million bbl in the week ended April 30, according to analysts and traders, while gasoline stockpiles are likely to have fallen by 900,000 bbl on week. Stocks of distillates are seen falling by 1.2 million bbl from the previous week. Refinery use likely rose by 0.5% to 85.9% of capacity.
The closely watched survey from the America Petroleum Institute is scheduled for release at 4:30 p.m. EDT.
At settlement, NYMEX June West Texas Intermediate futures rallied $1.20 to above $65.69 bbl and ICE July Brent advanced $1.32 to $68.88 bbl. NYMEX June RBOB futures surged 4.97 cents to $2.1512 gallon at settlement with the gasoline contract seasonally backwardated, while June ULSD futures gained 4.69 cents to $1.9988 gallon.
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