Crude oil prices today held on to earlier gains made this week that pushed them to the highest in almost two months as fears of a further escalation of violence in the Middle East and expectations of robust demand in the U.S. sparked optimism among traders.
Brent crude remained above $86, inching closer to $87 per barrel, while West Texas Intermediate was above $83 per barrel at the time of writing. On Monday, prices jumped by 2.5%, pushed higher by summer driving season demand expectations.
However, speaking to Reuters, oil analyst Vandana Hari from Vanda Insights said that the price rise "appears to be more fear and sentiment driven than fundamentals," suggesting the actual supply-demand situation remained pretty much unchanged.
Meanwhile, a hurricane developing over the Atlantic has also helped push oil prices higher, Hurricane Beryl, Bloomberg reported, has strengthened to a Category 5 phenomenon, which is the highest level on the hurricane measuring scale. However, the weather system made landfall earlier this week in the Caribbean and appears set to weaken from now on, before making its final landfall as a Category 1 storm, the AP reported.
"The breakout of the recent range to a new higher high reinforces the near-term upward trend," IG Asia analyst Yeap Jun Rong told Bloomberg.
Meanwhile, more bullish news for oil prices is coming later this week, as the American Automobile Association forecast that holiday travel this July 4 weekend will be 5.2% higher than last year's, suggesting stronger oil demand. Car travel, per the AAA, would be 4.8% higher than last year.
That should at least temporarily alleviate concern about the strength of demand in the world's largest consumer, the U.S., especially after the release of the latest inflation data that showed no monthly change in May. Easing or stabilizing inflation is considered bullish for oil.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More