Oil futures rose Thursday, with the U.S. crude benchmark ending above the $80-a-barrel threshold for the first time in three months as investors looked for further tightness in global supplies.
Price action
-
West Texas Intermediate crude for September delivery
CL00,
+0.98% CL.1,+0.98% CLU23,+0.98% rose $1.31, or 1.7%, to close at $80.09 a barrel on the New York Mercantile Exchange, its highest finish since April 18. -
September Brent crude
BRNU23,
+0.66% , the global benchmark, rose $1.32, or 1.6%, to settle at $84.42 a barrel on ICE Futures Europe, also the highest since April 18. October Brent BRN00,+0.83% BRNV23,+0.83% , the most actively traded contract, gained $1.23, or 1.5%, to $83.79 a barrel. -
Back on Nymex, August gasoline
RBQ23,
-0.64% rose 1.5% to end at $2.9505 a gallon, its highest since Oct. 27, 2022. August heating oil HOQ23,+0.02% jumped 2.6% to $2.9169 a gallon. - August natural gas NGQ23 dropped 6.5% to close at $2.92 per million British thermal units as it expired. The September contract
Market drivers
Crude was back on the rise Thursday. Bullish analysts contended that tight supplies and optimism over the outlook for the global economy, with central banks seen close to the end of a cycle of interest rate rises, should keep prices supported.
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Oil had briefly pulled back from three-month highs on Wednesday after weekly government data showed smaller-than-expected declines in inventories of crude, gasoline and distillates.
A roughly $10-a-barrel rise over the last four weeks “has been driven primarily by OPEC+’s voluntary production cuts announced in April and implemented in May,” strategists at UBS wrote in a Thursday note. Some recent unplanned production outages during the demand-heavy Northern Hemisphere summer months also helped, they said, predicting markets should tighten further as Saudi Arabia’s extra, voluntary 1 million barrel-a-day production cut for July and August comes into effect.
The UBS analysts projected a market deficit of 700,000 barrels a day in June and around 2 million barrels a day in July and August.
“We expect oil prices to trend even higher once these deficits become visible in on-land oil inventories,” they wrote. “The size of the market deficit in September will depend, among other factors, on if the extra 1mbpd Saudi production cut is extended into September.”
Crack spreads, or the price differences between oil and oil products, are rising along with oil prices, StoneX’s Kansas City energy team, led by Alex Hodes, wrote in Thursday’s newsletter.
That indicates the market is “forecasting stronger demand in the second half of the year, likely buoyed by Chinese stimulus, as well as signs that a U.S. recession could after all experience a soft landing.”
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Natural-gas prices, meanwhile, fell sharply.
Prices extended their losses after the Energy Information Administration reported on Thursday that U.S. natural-gas supplies in storage rose by 16 billion cubic feet for the week ended July 21.
Analysts had called for a storage increase of 21 billion cubic feet on average, according to a survey conducted by S&P Global Commodity Insights.
