NYMEX ULSD     $1.1547 UP $.0334

NYMEX Gas       $1.2103 UP $.0153

NEWS

Crude oil futures gave up earlier losses on Tuesday to finish higher, with expectations for a rebound in energy demand among the reasons for the late day turnaround. Prices had spent most of the session trading lower on the back of worries about compliance with a newly-extended pact between the Organization of the Petroleum Exporting Countries and its allies to cut production by nearly 10 million barrels. In addition, Gulf producers may end their voluntary extra output cuts at the end of June and U.S. producers may reverse output cuts as prices rise. Oil prices, however, turned positive after a “trifecta of headlines supported the argument that the oil market will find balance soon,” Edward Moya, senior market analyst at Oanda, told MarketWatch.

In an update Tuesday, the Bureau of Safety and Environmental Enforcement reported that 31% of U.S. Gulf of Mexico oil production remained offline. That’s only a slight improvement from 34% a day earlier, “suggesting production is not coming back immediately from the region hit by Tropical Storm Cristobal,” said Moya. Also, Nigeria is reportedly struggling to sell their crude, “which could help them refrain from excessively cheating with their production cut promises with the OPEC+ accord,” he said.

The Energy Information Administration’s Short-Term Energy Outlook report Tuesday, meanwhile, “confirmed the energy market’s view that global demand will fall to the low 80-million [barrel per day] level this quarter before rebounding back above 90-million next year,” he said.

The  EIA on Tuesday raised its 2020 forecasts for West Texas Intermediate to $35.14, up nearly 17% from its May forecast. It also said Brent crude oil prices are likely to average $38.02 this year, up 11.4% from the previous view. The change in the Brent forecast is “largely due to higher than expected crude oil prices in May, driven by a combination of additional OPEC+ production cuts, declining U.S. production, and rising demand related to reductions in COVID-19 stay-at-home orders,” said Dr. Linda Capuano, EIA administrator, in a statement.

The EIA also lowered its expectations for 2020 U.S. crude-oil production by 1% to 11.56 million barrels per day. Global demand for petroleum and liquid fuels, meanwhile, will likely average 83.8 million barrels per day in the second quarter of this year, with total consumption averaging 92.5 million barrels a day in 2020, down 8.3 million barrels a day from 2019, the EIA said. Meanwhile, Reuters reported Tuesday that Libya’s Nationa Oil Coroporation declared force majeure on exports from its Sharara oilfield after an armed group shut the field’s production just days after it had reopened.

Looking ahead, the EIA will release its weekly U.S. petroleum supply data early Wednesday, after the release of the American Petroleum Institute’s figures late Tuesday.

On average, analysts polled by S&P Global Platts expect the EIA to report a decline of 3.2 million barrels for the week ended June 5. They also forecast inventory increases of 300,000 barrels for gasoline and 1.5 million barrels for distillates.