Oil Futures Cut Early Losses, Settle Modestly Higher

After staying weak for much of the day’s trading session, crude oil prices recovered on Tuesday amid expectations of higher seasonal demand and on U.S. government’s plans to refill the emergency oil reserve.

Oil prices fell earlier in the session amid concerns about outlook for energy demand after data showed a contraction in China’s imports in April. Exports rose in the month, but at a slower pace, the data showed.

Also, traders were cautious as they looked ahead to U.S. inflation data for clues about the Federal Reserve’s interest rate moves.

West Texas Intermediate Crude oil futures for June, which had tumbled to 71.34 a little before noon, rallied to settle at $73.71 a barrel, gaining $0.55 or about 0.8%.

Brent crude futures recovered from a low of $74.95 a barrel, and were up $0.35 or 0.45% at $77.36 a barrel a little while ago,

The Energy Information Administration (EIA) said in a report that seasonal demand for oil is likely to be higher this year.

“We expect the seasonal rise in oil consumption and a drop in OPEC crude oil production to put some upward pressure on crude oil prices in the coming months,” the EIA said in its Short Term Energy Outlook.

The EIA said it expects crude production will rise 5.1% to 12.53 million barrels per day this year, but lowered its output estimate for the current year and the next from earlier forecasts.

The EIA has also cut its price target for Brent and WTI by over 7% to $78.65 a barrel and $73.62 a barrel, respectively.

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