Crude oil stable; heading for more weakly gains
2024.06.21 08:41
Investing.com — Oil prices traded marginally higher Friday, on course for weekly gains amid signs of improving demand in the United States, the world’s biggest oil consumer.
By 08:20 ET (12.20 GMT), the futures traded 0.1% higher at $81.32 a barrel and the contract climbed 0.1% to $85.75 a barrel.
Both benchmarks are on course to register gains of over 3% this week, a second consecutive winning week, trading close to the highest levels in over seven weeks.
US crude stockpiles fall
Data released on Thursday by the showed a drawdown in U.S. crude stockpiles by 2.5 million barrels in the week ending June 14, more than the 2.2 million-barrel draw expected.
Additionally, U.S. government data showed total product supplied, a proxy for the country’s demand, rose by 1.9 million barrels per day (bpd) on the week to 21.1 million bpd.
Worries over economic activity in the world’s largest economy have weighed on the crude market as the Federal Reserve keeps interest rates at elevated levels.
“The 4-week average implied gasoline demand also continues to trend higher as we move deeper into the US summer driving season, which will ease some concerns over gasoline demand. Demand though is still tracking just below levels seen last year,” said analysts at ING, in a note.
Geopolitical risk adds support
Ukraine’s military said its drones struck four oil refineries, radar stations and other military objects in Russia in the early hours of Friday.
Meanwhile, Israel continues its bombardment of Gaza in its war with Hamas, a few days after the country’s Foreign Minister Israel Katz also warned of a possible “all out war” with Lebanon’s Hezbollah.
The head of Hezbollah this week pledged a full-on conflict with Israel in the event of a cross-border war and also threatened EU member Cyprus for the first time.
A face-off between Israel and Hezbollah raises the risk of a wider conflict in this important oil-rich region, potentially disrupting global supplies.
Strength in physical market
There have also been some signs of strength in the physical market.
“There has also been renewed strength in the North Sea physical market despite the return of supply from the Buzzard field. OPEC+ cuts mean that the market should tighten further as we move into the third quarter, suggesting that there is still room for the market to move higher from current levels,” said ING.
Hess sale to Chevron stalled
In corporate news, a contract arbitration panel that could block or green-light the $53 billion sale of Hess (NYSE:) to Chevron (NYSE:) remains incomplete three months after the case was filed.
The third and final arbitrator has not been appointed, Reuters reported on Thursday, and this delay could mean no decision this year.
