Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Oil Prices Climb on Demand Speculation

LONDON -- World oil prices pushed higher Tuesday, lifted by firmer markets in refined products and expectations of swelling demand for crude in coming weeks.

Benchmark Brent crude was trading 32 cents stronger at $23.06 a barrel, after touching an early high of $23.20.

The North Sea marker crude tracked overnight gains in U.S. light crudes, which were 29 cents firmer at $26.18 a barrel.

Appetite for crude is expected to rise shortly as European refineries complete one of their most extensive spring maintenance programs for years.

The work has taken out an estimated 1 million barrels per day of capacity, according to some estimates.

"We are seeing one of the largest refinery maintenance programs in Europe for many years, so the actual physical demand for crude is lower than it would be normally in the second quarter," said David Stedman of Daiwa Research.

"So I think that where we are at the moment - the $22s, the $23s - is a little temporary. So I would expect that as those refineries come back on stream, we would move back to the $24 to $25 level for Brent within a month's time," he added.

London brokers GNI said the market had enjoyed a lift from strength in products and might win additional help from dealers seeking to profit from the expiry Wednesday of the front month crude contract on the New York Mercantile Exchange.

The profitability of producing products like gasoline and diesel on both sides of the Atlantic remains firm, GNI added, due to crude's fall from nine-year highs over the past month.

Good demand for heating oil in the United States also Monday boosted prices, and industry sources said there were also signs of increased diesel-fuel consumption because of spring planting.

London's Center for Global Energy Studies said the market expects to see less OPEC compliance with output quotas in the short term, but that longer-term supply remains a concern.

It said product stocks remain at record lows, "leaving the market operating at close to minimum operating levels for the rest of the year."

Players are looking for signs of drawdowns in U.S. stocks of middle distillates - comprising heating oil and diesel - when the American Petroleum Institute releases new inventory data after the close of trade Tuesday.

While the United States appears to be so far content with a pledged 7 percent rise in Organization of Petroleum Exporting Countries output under an agreement in March, it said it was still carefully watching the oil market.

"The psychological state of the market has improved. We have to improve oil stockpiles and they are improving," U.S. Energy Secretary Bill Richardson said in an interview published in Tuesday's Saudi-owned, pan-Arab daily al-Hayat.

OPEC ministers have said they would raise or cut production by 500,000 bpd if a 20-day average for a basket of seven reference crudes was outside a $22 to $28 range.

A Saudi signal Monday reiterating OPEC's readiness to act swiftly in case of sharp price swings also helped boost prices.