Oil Steady Near $70 as Improving Demand Outlook Adds to Optimism

(Bloomberg) -- Oil was steady near $70 a barrel in early Asian trading after an industry report pointed to another draw in U.S. crude stockpiles, reinforcing optimism around the demand recovery.

Futures in New York settled above the threshold on Tuesday for the first time since October 2018 after bouncing off the mark earlier the week. The American Petroleum Institute reported crude inventories fell by 2.11 million barrels last week, according to people familiar with the data. The market for Middle Eastern crude is also showing signs of strength, adding to the positive outlook.

The robust rebound has been underpinned by a demand recovery in the U.S., China and Europe, and there are signs the Covid-19 resurgence in Asia may be easing. The U.S. State Department loosened its travel warnings for nations around the world, which could pave the way for more airline travel.

The prompt timespread for Brent was 42 cents in backwardation -- a bullish market structure where near-dated contracts are more expensive than later-dated ones. That compares with 37 cents at the beginning of last week.

U.S. gasoline stockpiles rose by 2.41 million barrels last week, while distillates -- a category that includes diesel -- increased by 3.75 million barrels, the API said. If government data due Wednesday confirms nationwide crude inventories dropped, it would be a third weekly decline.

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