U.S. oil prices were slightly higher early, as a contract expiration, which roiled markets last month, comes back into focus, but this time amid a market that appears to be demonstrating signs of better supply-demand alignment.
The June Nymex contract for West Texas Intermediate oil, which is due to expire at the end of Tuesday’s trade, was up early Tuesday after the May contract marked a historic traverse into subzero territory on April 20.
“We find that this time around, trading has been a lot more cautious this month, making the prospect of sharp negative prices unlikely,” wrote Paola Rodriguez Masiu, senior oil markets analyst at Rystad Energy, in a Tuesday research note.
“There are two main forces behind a stronger oil price, the declining supply and the improving demand. Today the market sees both forces aligning,” he wrote.
West Texas Intermediate crude for June delivery was trading 86 cents, or 2.7%, higher at $32.68 a barrel on the New York Mercantile Exchange, after surging 8.1% on Monday.
The July contract, which is the most-actively traded and is soon to be the front-month contract was seeing more modest trade, up 21 cents, or 0.6%, at $31.84 a barrel, following a 7.2% rally for the contract in the previous session.