U.S. oil prices rose on Tuesday, buoyed by the start of the U.S. summer driving season, while international fuel markets fell on rising output in the Middle East, which mostly serves Asian customers.
U.S. West Texas Intermediate (WTI) crude oil futures were trading at $49.58 per barrel at 0707 GMT (04:07 a.m. EDT), up 25 cents from their last settlement. Brent crude oil futures were down 18 cents to $49.58 a barrel.
Demand in North America is set to pick up as the summer driving season signals peak demand, triggering a cut in the amount of open short crude positions that would profit from falling prices.
“Investor positioning points to further support for commodity prices as bearish bets continue to be reduced,” ANZ bank said on Tuesday.
The number of outstanding managed short crude positions of U.S. WTI crude futures on NYMEX fell to its lowest level this year last week.
“Since the start of the rally back in February … speculative length on the NYMEX have been growing by 0.6 percent per week, whereas speculative shorts have been falling by 8 percent per week,” the U.S.-based Schork Report said in a note to clients.
The pick-up in demand is also seen in rising U.S. refining availability, which is expected to increase by 354,000 barrels per day (bpd) in the week to June 3 compared with the previous week, according to data from research company IIR.
International oil markets, however, were hit by a rise in Middle Eastern crude exports.
Iraq will supply 5 million barrels of extra crude to its partners in June, industry sources familiar with the issue said, joining other Middle East producers by lifting market share ahead of an OPEC meeting this week.
Iraq, which is the second-largest producer in the Organization of Petroleum Exporting Countries, had already been targeting record crude export volumes from southern terminals next month of 3.47 million barrels per day.
Saudi Arabia, the world’s top crude exporter, as well as fellow OPEC producers Kuwait, Iran and the United Arab Emirates, also plan to raise supplies in the third quarter in an ongoing race for market share in the world’s biggest consumer region, Asia.