Prices of crude surged on Tuesday, strengthened by anticipations that demand could climb quickly enough to be in line with supply this year.
However, worries over a potential battle for market share between Iran and Saudi Arabia hindered increases for oil.
Internationally traded Brent crude futures on the ICE futures exchange jumped by 74 cents at $45.22 per barrel.
The American Petroleum Institute will publish its inventories report later in the day while Wednesday’s government report is forecasted to indicate crude stockpiles soar by 2.3 million barrels in the week ended April 22.
According to a market analyst, “Market fundamentals continue to suggest that the combination of robust demand and weak supply growth will move global oil markets closer into balance by the end of the year.”
On the New York Mercantile Exchange, crude oil for June delivery elevated 74 cents or 1.74 percent, to trade at $43.38 per barrel.
In the previous session, New York Mercantile Exchange crude prices plunged $1.09 or 2.49 percent, after markets reported that United States crude stockpiles at Cushing, Oklahoma, which is the delivery point, edged higher by nearly 1.5 million barrels in the week to April 22.
NYMEX traded oil prices are above nearly 40 percent since dropping to 13 year lows at $26.05 on February 11, as a tumble in United States shale production uplifted sentiment.
However, analysts cautioned that market conditions were still weak because of an ongoing glut supply as Iran and Saudi Arabia could pump up output further in a race for customers.
As stated by a commodity analyst, “The biggest bear risk to the oil market right now is that Irans ramp-up accelerates and then that Saudi Arabia does the same. If anyone had a doubt about Saudi Aramcos ability to use its logistical system and spot sales to increase market share, its recent 730,000-barrel sale of a cargo to a Chinese teapot refiner in Shandong should lay any doubts to rest.”
Reports say that it was possible that Saudi Arabia was targeting 500,000 barrels per day in new sales to bring its production up to at least 11 million barrels per day.
Prices of crude has grown by nearly 14 percent in April, being it on track for its biggest monthly increase in a year and some analysts are doubtful to be too positive about the prospects of further surge, given that supply and demand are still not in line to the tune of some 1 million barrels per day.
As reported by an analyst, “I think there is a downside correction due, but its all about timing. Maybe all the bulls are looking much further ahead than I do and are looking at the second half of the year, which is going to be less oversupplied than the first half. But on the other hand, the feeling two months ago was that in the second quarter, every single day global stocks would build by 1 or even 2 million barrels.”