Oil extends gains on higher gasoline demand, tighter supply

Oil prices continued to climb on Tuesday with investors expecting a tighter market led by a seasonal rise in gasoline demand and supply cuts from OPEC+ producers, though concerns over the risk of a U.S. debt default capped gains.

Brent crude futures rose 35 cents, or 0.46%, to $76.34 a barrel by 0630 GMT while U.S. West Texas Intermediate (WTI) crude was at $72.41 a barrel, up 36 cents, or 0.50%.

It was the second day of gains after Brent rose 0.5% on Monday. WTI gained 0.6%, amid a 2.8% increase in U.S. gasoline futures ahead of the Memorial Day holiday on May 29 that traditionally marks the start of the peak summer fuel demand season.

“Oil prices are consolidating their bottoms, helped by a seasonal increase in U.S. gasoline demand from next week, production cuts by OPEC+ from this month and planned U.S. purchases to refill the Strategic Petroleum Reserve (SPR),” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.

Last week, the U.S. Department of Energy said it would buy 3 million barrels of crude oil to replenish the SPR for delivery in August.

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