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As the US travel restriction is lifted, oil prices are approaching $84 a barrel

LONDON: On Tuesday, oil surged above $84 a barrel for the third straight session, as the US removed travel restrictions and additional evidence of a worldwide post-pandemic rebound boosted demand, but supply remained tight.

Travelers headed back to the United States on Monday, with the passage of US President Joe Biden’s infrastructure plan and better-than-expected Chinese exports helping to build an image of a global economy on the mend.

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After rising 0.8 percent on Monday, Brent crude increased $0.31, or 0.4 percent, to $83.74 a barrel around 1150 GMT. US oil rose $0.36, or 0.4 percent, to $82.29, following a 0.8 percent gain the day before.

“With the reopening of US borders to vaccinated travellers, jet fuel consumption could see a healthy… rise,” oil broker PVM’s Tamas Varga said.

“The approval of a $1 trillion infrastructure plan in the United States Congress is also likely to bring considerable assistance.”

Brent has increased more than 60% this year, reaching $86.70 on October 25, a three-year high, owing to supply limitation by the Organization of Petroleum Exporting Countries and Allies (OPEC+) and improving demand.

At a meeting last week, OPEC+ decided to stick to its existing pace of easing of record output cuts and rebuff US pleas to pump more – helping to keep supply tight for the near term in the view of some analysts.

JPMorgan Chase said global demand for oil in November was already nearly back to pre-pandemic levels of 100 million barrels per day (bpd), following last year’s collapse.

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Biden, however, may take measures as early as this week to address soaring gasoline prices, US Energy Secretary Jennifer Granholm said on Monday.

Despite a tight global market, US crude inventories are expected to have risen for a third straight week, possibly helping to cap further gains in prices.

The first of this week’s two supply reports, from industry group the American Petroleum Institute, is due at 2030 GMT.

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