LONDON, May 6 — Oil gained more than US$1.50 per barrel on Tuesday, rebounding on technical factors and bargain hunting after a decision by OPEC+ to boost output sent prices down in the previous session, although concerns about a market surplus persisted.
Brent crude futures rose US$1.57, or 2.6 per cent, to US$61.80 a barrel by 1031 GMT, the first gain after six consecutive declines, while U.S. West Texas Intermediate crude added US$1.53, or 2.7 per cent, to US$58.66 a barrel.
Both benchmarks settled at their lowest since February 2021 on Monday, driven by an OPEC+ decision over the weekend to further accelerate oil production hikes for a second consecutive month.
"It is rather surprising that we got this rebound this morning. But $60 [a barrel] is a psychological line.
"When oil drops down below US$60, you get people saying, all right, this is a great price," said SEB chief commodities analyst Bjarne Schieldrop.
Driven by expectations that production will exceed consumption, oil has lost over 10 per cent in six straight sessions and dipped over 20 per cent since April when United States (US) President Donald Trump's tariff shocks prompted increased bets on a slowdown in the global economy.
The return of Chinese market participants after a five-day public holiday since May 1 also supported prices on Tuesday.
"China also reopened today, and being the largest importer, buyers would have likely jumped to secure oil at current low levels," said Phillip Nova senior market analyst Priyanka Sachdeva.
Also lending some support were Saudi Arabia's latest official selling prices for its oil, which Reuters reported on Monday, according to UBS commodities analyst Giovanni Staunovo. The prices were cut modestly.
"They do not show much of a fight for market share. It is still a modest unwinding of the [OPEC+] cuts.
"This will have readjusted some expectations," he said.
A data release showed a pick-up in the services sector's growth in the US, the world's major oil consumer, as orders increased.
The Institute for Supply Management (ISM) said on Monday its non-manufacturing Purchasing Managers Index (PMI) increased to 51.6 last month from 50.8 in March. Economists polled by Reuters had forecast the services PMI dipping to 50.2.
The US Federal Reserve will likely leave interest rates unchanged on Wednesday as tariffs roil the economic outlook.
"Today’s slight rebound in oil prices appears more technical than fundamental. Persistent headwinds, including a pivotal shift in OPEC+ production strategy, uncertain demand amid US tariff risks, and price forecast downgrades, are continuing to weigh on the broader price movement," said IG market strategist Yeap Jun Rong.
Barclays lowered its Brent crude forecast on Monday by US$4 to US$70 a barrel for 2025. They set its 2026 estimate at US$62 a barrel, citing "a rocky road ahead for fundamentals" amid escalating trade tensions and OPEC+'s pivot in its production strategy.
Goldman Sachs also lowered its oil price forecast on Monday by US$2 to US$3 per barrel, as they now expect another 400,000 barrels per day production increase by OPEC+ in July.
— Reuters
