Crude Oil Edges Lower; Brent Likely to Hit $135/Bbl
2022.06.07 16:41
By Peter Nurse
Investing.com — Oil prices edged lower Tuesday, handing back some of the recent gains although the overall tone remains bullish with demand set to pick up in China and supply remains tight.
By 9:10 AM ET (1310 GMT), U.S. crude futures traded 0.3% lower at $118.10 a barrel, retreating from Monday’s three-month high, while the Brent contract fell 0.3% to $119.14 a barrel.
U.S. Gasoline RBOB Futures were down 2.8% at $4.0737 a gallon.
Crude oil prices eased a little as market sentiment swung back toward concern over global demand as the 50 basis point hike by the Reserve Bank of Australia focused investors’ minds about likely monetary policy tightening in the U.S., Europe and the U.K.
That said, easing travel restrictions in China are likely to boost oil demand in the coming weeks, with the capital Beijing and the commercial hub Shanghai easing COVID-19 curbs and allowing more mobility.
Saudi Arabia, the world’s largest crude exporter, showed sufficient confidence in future demand that earlier this week it raised July’s official selling price to Asia by $2.10 from June for its flagship Arab Light crude, just off an all-time peak recorded in May.
Even last week’s decision of the Organization of the Petroleum Exporting Countries and allies to boost output by 648,000 barrels a day for July and August, about 50% more than expected, has had little impact on the bullish sentiment.
“It is difficult to see a significant downside for the market in the coming months,” said analysts at ING, in a note. “The shunning of Russian oil will continue to tighten the balance, whilst very healthy refinery margins should provide further support to crude prices.”
Brent crude will need to average $135 a barrel in the 12 months from July, up $10 from the bank’s previous forecast, for global inventories to normalize by late 2023, analysts at Goldman Sachs said, in a note, in the face of rebounding Chinese demand and reduced production from Russia.
Investors now await U.S. crude supply data from the American Petroleum Institute at 4:30 PM ET.
Inventories fell over 1 million barrels last week and are expected to continue falling as the driving season continues in full swing in the U.S., the largest consumer of crude in the world.
