WASHINGTON (DTN) -- In early trade Wednesday, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange edged higher, with the U.S. crude benchmark trading above $70 per barrel (bbl) amid signs of easing travel restrictions in some developed countries that are part of the Organization for Economic Cooperation and Development that is seen boosting economic activity and demand for jet fuel to further draw down global oil inventories in the second half of 2021.
Global oil consumption is expected to rise by 2.8 million bpd from the second quarter to the second half this year, according to the latest forecast from the U.S. Energy Information Administration, leaving global inventories in destocking pattern for the remainder of the year. Although the post-pandemic recovery has been uneven, gains in fuel consumption from leading economies including the United States, European Union, and China, are expected to offset laggard growth from emerging markets and developing economies. Fuel growth in emerging and developing countries will likely not emerge in 2021, with the World Bank on Tuesday projecting the recovery across these economies would not reach sufficient levels to reverse the economic damage from the pandemic until at least 2023. Despite the somber forecast, the World Bank still expects the global economy to expand 5.6% in 2021 -- its strongest post-recession pace in 80 years.
Domestically, economic output seen growing this year between 6.7% and 6.8%, reflecting easing COVID-19 restrictions and broader economic re-openings. U.S. COVID-19 caseload plummeted in recent weeks which has given governors and mayors across the country confidence to lift all quarantine restrictions for the summer.
The Biden administration is now under heavy pressure to reopen the country for international travelers, something the White House has so far been reluctant to agree to. However, this may be changing. On Tuesday, the Biden administration said it is forming expert working groups with Canada, Mexico, the European Union, and the United Kingdom to determine how best to safely restart travel after 15 months of pandemic restrictions.
"While we are not reopening travel today, we hope that these expert working groups will help us use our collective expertise to chart a path forward, with a goal of reopening international travel with our key partners," read a White House statement.
Center for Disease Control and Prevention on Tuesday removed travel warnings on 110 countries and territories, including Canada, Mexico, Japan, and the European Union.
Many EU area countries are now open for tourism for fully vaccinated travelers, some only to other EU countries and some to anyone with a negative COVID-19 test result. Many more are expected to announce further reopenings throughout June and July.
On the back of the brighter outlook, EIA revised higher its price outlook for the rest of 2021, with Brent prices seen averaging $69 bbl in June and $68 bbl in third quarter, which are $4 bbl and $5 bbl higher, respectively, than in last month's forecast.
Later Monday morning, oil traders will shift their focus to weekly EIA inventory data due out 10:30 a.m. ET. American Petroleum Institute reported Tuesday U.S. commercial crude oil supplies fell 2.108 million bbl last week, slightly below calls for a draw of 2.3 million bbl while stocks at the Cushing, Oklahoma hub decreased 420,000 bbl in the week ended June 4. Gasoline stockpiles rose 2.405 million bbl compared to estimates for a gain of 300,000 bbl while distillate inventories increased 3.752 million bbl last week, nearly three times calls for a 1.3 million bbl build.
In early trading, West Texas Intermediate July futures edged up $0.22 to trade near $70.26 bbl, and the international crude benchmark Brent contract for August delivery gained $0.24 to $72.46 bbl. NYMEX July ULSD futures were up 0.60 cent to $2.1423 gallon and the front-month RBOB contact advanced 0.95 cent to trade near $2.2288 gallon.
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