Confidence about reduced inventories in the world's largest consumer prompted West Texas Intermediate crude oil futures to climb in value on Tuesday as the energy commodity marked a third consecutive day of gains, according to Bloomberg.
For the second consecutive week, supplies in the U.S. dropped, a survey administered by the news service indicated. Slipping supplies typically means stronger demand, which in turn signifies economic strength. The official data is slated for release by the U.S. government on Wednesday.
The production quota of the Organization of the Petroleum Exporting Countries is likely to commit to a continued effort to generate 30 million barrels per day, according to the oil minister of member nation Venezuela.
"The inventory report will be a key number," chief strategist Michael McCarthy with CMC Markets in Sydney told the news source on Tuesday. "Brent is bumping up against a ceiling of $110 a barrel on the charts, while West Texas has got room to move up to about $105.25."
Thus far this year, crude oil prices have climbed about 6.4 percent.
The median projection of six economists and analysts polled by Bloomberg said supplies fell to about 388 million barrels. The inventory total checked in at 399.4 million toward the end of April, which marked its top level since the U.S. Energy Information Administration started providing weekly information about supplies in the early 1980s.
Supplies of gasoline developed by 1 million barrels to amount to nearly 213 million barrels, according to the survey of economists and analysts. The news comes early on during the peak driving season in the U.S., which stretches from Memorial Day Weekend in late May to Labor Day Weekend in early September.
An industry group, the American Petroleum Institute, is slated to release inventory data later during the Tuesday trade session.
Hope for U.S., Chinese demand prospects
Reuters reports hopes are high that demand for oil from the globe's two top oil consumers will grow. Both the U.S. and China, respectively the lead consumer and the second-largest, also host the world's biggest economies, which also are in that order.
The People's Bank of China slashed the amount of reserves that banks may offer to the agricultural sector, which helps sustain the economy. The Asian nation has been struggling with economic challenges that have not gone unnoticed.
So too are the country's efforts to address these challenges noticeable, as one analyst noted plays a role in impacting the price and market of oil.
"We are at a critical little juncture for oil markets, with both benchmarks trying to push above key trendline resistance," chief market analyst Ric Spooner with CMC Markets told Reuters on Tuesday. "People are getting confident about the global demand outlook."
Asian nation spurs growth
China's efforts to boost business sentiment within the nation are likely to impact the performance of the oil market, according to MarketWatch.
One researcher said the activity in China likely already spurred the price of oil higher.
"One possible reason for the unexpected price rise may be the lowering of the reserve requirement ratio for some Chinese banks, which is hoped to stimulate a revival of (oil) demand in China," head of commodity research Eugen Weinberg Commerzbank in Frankfurt told MarketWatch on Tuesday.
The energy commodity is coming off a strong performance during the first day of the trade week. On Monday, crude oil futures notched their biggest one-day increase in roughly 60 days, as far as value and percentage terms are concerned.
For that reason, last week's data about economic growth in Japan – host of the world's third-largest economy – also spurred the energy commodity's development on Monday.
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