Crude oil futures rose on Thursday, with WTI crude back above $70 a barrel for nearly a week ahead of a production decision at an OPEC+ meeting on Sunday, despite official US data showing an unexpected rise in supply last week. We’ll see you for the first time.
Due to concerns about the global economic outlook, oil prices fell sharply in May, and coming into June, oil prices bid farewell to the fog of the previous month.
energy commodity prices
- West Texas Intermediate (WTI) crude futures for July delivery rose $2.01, or 3%, to $70.10 a barrel, recovering from the lowest since March 20 struck the previous day.
- Brent crude futures for delivery in August rose $1.68, or 2.3%, to $74.28 a barrel.
- Gasoline futures for July delivery fell 0.3% to settle at $2.44 a gallon.
- Thermal oil futures for July delivery rose 2.8% to settle at $2.31 a gallon.
- Natural gas futures for July delivery fell 4.8% to settle at $2.16 per million Btu.
supply report
Tariq Zahir, managing director of Tyche Capital Advisors, said US oil supply data was generally bearish but oil prices remained strong, which is not surprising as several factors will come into play in the days and next weeks, including The OPEC + on Sunday. The meeting may announce further production cuts.
The Energy Information Administration (EIA) reported on Thursday (1st) that US commercial crude oil inventories increased by 4.5 million barrels last week (5/26).
According to the S&P Global Commodity Insights survey, analysts on average expected last week (5/26) US crude oil supply to fall by 3.4 million barrels. The American Petroleum Institute (API) reported late Wednesday that US crude inventories rose by 5.2 million barrels last week.
DTN senior market analyst Troy Vincent said the build in crude inventories largely reflected a rebound in net exports. Net exports rebounded after a week of strong exports and notably weak imports amid limited domestic refinery operations.
The EIA report also showed that US gasoline inventories fell by 200,000 barrels last week, while distillate supplies rose by 1 million barrels.
Analysts on average expected a draw of 500,000 barrels in gasoline inventories and a draw of 280,000 barrels in distillate inventories last week, according to S&P Global Commodity Insights.
Elsewhere, crude inventories at the Nymex distribution center in Cushing, Oklahoma, rose by 1.7 million barrels for the week, while oil inventories at the Strategic Petroleum Reserve (SPR) fell by 2.5 million barrels.
market drivers
WTI oil prices fell more than 11% last month, the biggest monthly drop since November 2021, and Brent oil prices fell 8.7% in May, the biggest monthly drop since November 2022.
DTN’s Vincent pointed out that global manufacturing, industrial and freight data continued to reflect marked weakness in energy and oil-intensive business activities, along with strong growth in non-OPEC crude oil supply, which EIA also conceded that it underestimates the raw material of the United States. oil production, released on Wednesday In the latest monthly report, crude oil was produced in March by nearly 500,000 barrels per day. So pressure is mounting on OPEC+, especially Russia, to implement their announced production cuts if they are to prevent prices from falling.
The meeting of OPEC + (the Organization of the Petroleum Exporting Countries and its allies, including Russia) on June 4 is currently under consideration.
Zahir of Tyche Capital Advisors said that if there is news of another production cut at this meeting, it will push oil prices, while OPEC wants to see higher oil prices because its market share has been hit by Russia’s oil sales to China .
Saudi Arabia’s energy minister warned short sellers to be “careful”, leading analysts to expect a decision to extend production cuts at the OPEC+ meeting, however, Russia’s deputy prime minister later said he saw no need for additional measures.
Stephen Innes, general manager of SPI Asset Management, said oil market participants expect the nine major OPEC+ oil producers that have announced voluntary production cuts in April to keep their output unchanged, but will certainly make some comments , and OPEC may also increase the extent of production cuts Expanding to smaller oil producers. However, it remains to be seen whether OPEC’s move will stop the fall in prices as Russia does not intend to cooperate.
Victoria Dircksen, a commodities analyst at Schneider Electric, said the US debt limit bill was passed by an absolute majority in the House of Representatives on Wednesday and will now go to the Senate, where it is also expected to pass. in oil consuming countries.
The EIA reported Thursday that US natural gas supplies rose by 110 billion cubic feet last week (ended 5/26). Natural gas futures closed down almost 5% following the report.
According to the S&P Global Commodity Insights survey, analysts on average expected last week (5/26) US natural gas supply to increase by 107 billion cubic feet. During the same period last year, natural gas supply increased by only 82 billion cubic feet.
