Oil rallied in tandem with broader markets as resumption efforts gained support in the US and helped allay fears of virus-related setbacks elsewhere.
New York futures rose for the second straight session after volatile trading on Wednesday. New York’s beaches will open on Memorial Day weekend, a testament to the progress major cities in the world’s largest oil-consuming country are making towards full openings.
At the same time, despite the fact that domestic gasoline stocks rose by more than 4 million barrels last week on the back of a sharp increase in imports, fuel demand continued to rise. A report from the Energy Information Administration also showed that crude oil inventories fell in the second week, bringing inventories to a five-week low.
“This is a battle over whether we get a full summer driving season,” said John Kilduff, partner at Again Capital LLC. “It will be a major challenge, but there is a bias in favor of it, given the pace at which the vaccine is deployed.”
US benchmark crude oil futures have been stuck in the roughly $ 4 / bbl range since mid-March as new restrictions in Europe offset stronger demand in the US and China. According to the EIA report, the four-week average for gasoline supplied to the US – a consumption figure – reached its highest level since September. The scale has increased each of the last six weeks.
“The US has made really good progress with COVID, while Europe remains challenged with vaccine rollouts and rising cases,” said Brian Kessens, portfolio manager at Tortoise, a firm that manages energy-related assets, at the amount of about $ 8 billion. “If there is a better side, Europe is likely to be more aggressive in terms of isolation now, so the summer does look a lot brighter.”
- The West Texas intermediate for May delivery rose 44 cents to $ 59.77 a barrel.
- The price of Brent crude oil with settlements in June rose 42 cents, ending the session at $ 63.16 a barrel.
The spread between Nymex gasoline futures and WTI crude fell below $ 23 a barrel after the EIA report, with refineries operating at maximum capacity since March 2020 and the US importing the most gasoline since May 2019.
Oil prices also found support late in the session as US stocks bounced back from session lows. The minutes of the last meeting of the Federal Reserve System show that officials see some time before conditions are met to wind down a massive asset-buying campaign.
Investors are also watching AstraZeneca Plc’s COVID-19 vaccine developments and the UK is now encouraging those under the age of 30 to offer an alternative vaccine if available.
“Oil demand is expected to continue to recover from the second half of 2021, but these expectations are based on the assumption that enough people will be vaccinated by then to justify a return to normalcy,” said Louise Dixon, oil markets analyst at Rystad Energy. … AS. “The recovery in the oil market could slow, causing demand to fall 1 million barrels per day lower by 2021 than with a smooth rollout of the vaccine.”
- An Iranian-flagged vessel was attacked in the Red Sea, Iran’s foreign ministry said on the same day that Tehran and world powers met to discuss renewing the 2015 nuclear deal.
- Royal Dutch Shell Plc said it expects to make the first profit from pumping oil since the start of the pandemic. The company also said its Pernis refinery is repairing a lightning-struck installation.
- Passenger traffic in Poland declined 19 percent from two years earlier in the week ending April 4, compared with a smaller gap of 16 percent and 12 percent in the previous two weeks, according to automatic metering stations on highways and highways. …
– With the help of Sheela Tobben and Jeffrey Baer.