Oil Gains Near $120 With Traders Awaiting Summer Demand Uptick

West Texas Intermediate futures rose above $120 a barrel after settling 0.8% higher on Tuesday. Futures have fluctuated near a three-month high so far this week as banks including Goldman Sachs Group Inc. and Morgan Stanley underlined calls for higher prices in the coming months.

On Tuesday, the American Petroleum Institute reported that US gasoline stockpiles rose by 1.82 million barrels last week, according to people familiar with the data. That’s unlikely to provide much relief to a tight fuel market, with inventories at the lowest seasonal level in years.

The oil market has maintained its upward momentum this year as economies rebounded from the pandemic, though Russia’s invasion of Ukraine and a virus resurgence in China has led to extreme volatility at times. Beijing continues to roll back its Covid-19 curbs as infection rates ease. Last week, OPEC+ lifted output by more than it had previously planned, though the group has struggled to meet its targets in recent months.

“There is a shift in focus from higher production by OPEC+ towards the declining spare capacity,” said Hans Van Cleef, a senior energy economist at ABN Amro Bank NV. “I find it difficult to see arguments for lower prices in the near term.”

US crude stockpiles rose by about 1.85 million barrels last week, while inventories of distillates — a category that includes diesel — increased by about 3.38 million barrels, the API said. Official government data are due later Wednesday.