Oil held near a two-month high of $35 a barrel as supply curbs tighten the market and demand rebounds in the world’s largest consuming countries.

Prices for oil cargoes from Russia to Brazil have surged as fuel demand has recovered. Indian fuel sales have jumped in the first half of May and Chinese consumption has all but returned to where it was before the coronavirus outbreak. South Africa’s biggest oil refinery restarted operations as the country eases coronavirus-lockdown measures.

Tuesday also marks the expiry of the June West Texas Intermediate futures contract. While prices plunged at the end of the May contract’s trading period, oil has since staged a stellar recovery as producers embarked on deeper-than-expected output cuts. In a sign that the market is finding a new equilibrium, the premium traders pay for bearish put options versus bullish calls fell to the lowest since early March.

On the supply side, shale oil output from the U.S., the world’s biggest producer, is forecast to fall to the lowest since late 2018 next month, according to the Energy Information Administration. There’s also been a “stunning reversal” in OPEC+ shipments so far in May, data intelligence firm Kpler said, after the alliance’s deal to curb production kicked in at the beginning of the month.

“There’s a lot of optimism baked in here,” said Paul Horsnell, head of commodities research at Standard Chartered. “The market has balanced by supply coming off faster than expected.”

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