Oil jumps to 3-year high ahead of OPEC-Plus meeting

Oil prices rose on Tuesday, to head for the second straight daily gain, as the US crude hit its 3-year high and Brent hit its 3-month high, thanks to strong demand outlook during the summer season in the US, ahead of OPEC-Plus monthly meeting to discuss new developments in the market, especially the possible return of Iranian supply.

US crude rose 2.1% to its highest level since October 2018 at $68.39 a barrel, after opening at $66.99, and hit a low at $66.91, and Brent crude rose 2% to the highest since last March at $70.70 a barrel, after opening at $69.34, and hit a low of $69.31.

US crude gained 0.4% yesterday, and Brent crude rose 0.7%, lifted by expectations of strong global demand during the third quarter.

Oil prices scored a 5% gain during May, the second straight monthly gain, thanks to improved global demand after major countries started to ease the Covid lockdown restrictions.

The American gas stations tracking company "GasBuddy" said that US gasoline demand has jumped by 9.6% on Sunday above the average of the previous four Sundays to its highest level since summer 2019. 

This came as the summer driving season has started in the US after the weekend, while gasoline inventories already down near the lowest level in 5 years, according to new reports.

The meeting of OPEC-Plus Joint Ministerial Committee will launch later today, to review the global output cut agreement and to determine production levels during June and July, especially in light of the possible return of Iranian supply.

During the coalition meeting in early April, a gradual increase in supplies was approved starting in May, with a total of 1.15 million barrels per day distributed over three months.

The decision includes an increase of 350,000 bpd in May, a similar increase in June, and 450,000 bpd in July.

According to this decision, the current output cut will be reduced by 7.2 million barrels in April to 6.85 million barrels in May, and to 6.5 million barrels in June, and then to nearly 6 million barrels in July.

Sources said that OPEC-Plus said last week that the global collation is likely to commit to the current gradual easing of the output cut agreement during June's meeting, especially due to growing expectations of the global demand recovery and a possible increase in Iranian supplies.