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Crude oil futures jumped to their best levels since late April, adding to last week’s gains that followed reports from OPEC+, the International Energy Agency and U.S. Energy Information Administration which boosted confidence that oil demand will improve in this year’s H2.
“The outlook for strong fuel demand into the coming quarter and Saudi reassurance about the October hike being subject to prevailing conditions and added focus on quota breakers to bring production down and into line all seems to be supporting,” Saxo Bank’s Ole Hansen wrote, according to Reuters.
Mizuho’s Robert Yawger attributed Monday’s rally to speculative buying because of weak economic data from China, adding it could peter out at any moment.
“For the crude oil market to rally for size on fundamentals, China and gasoline during summer driving season need to improve dramatically,” Yawger said, doubtful about the prospects for a pickup in U.S. gasoline demand as summer advances.
Much of the rally was technical, supported by a belief that U.S. fuel demand will pick up as the summer driving season advances, BOK Financial’s Dennis Kissler said, noting that buying accelerated near midday after the front-month contract moved above the 200-day moving average.
Front-month Nymex crude (CL1:COM) for July delivery closed +2.4% to $80.33/bbl, and front-month August Brent crude (CO1:COM) finished +1.9% to $84.25/bbl, the highest settlement value for both benchmarks since April 30.
Also, U.S. natural gas futures fell for the fourth straight session, with the July front-month Nymex contract (NG1:COM) -3.2% to $2.788/MMBtu.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG)
The Biden administration is ready to release more oil from the U.S. Strategic Petroleum Reserve to stop any jump in gasoline prices at the pump this summer, the Financial Times reported Monday.
Senior White House advisor Amos Hochstein told FT that pump prices are “still too high for many Americans” and he would like to see them “cut down a little bit further.”
U.S. gasoline prices averaged $3.45/gal on Sunday, AAA reported, down slightly from a year ago but more than 50% higher than when Biden became president in January 2021.