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Crude Oil Higher; U.S. Demand Helps Market Rebound

Commodities1 hour ago (Jul 09, 2021 09:43AM ET)

(C) Reuters.

By Peter Nurse — Crude oil prices climbed higher Friday, helped by signs of strong demand in the world’s largest consumer even amid concerns about the spread of the delta variant of the Covid-19 virus.

By 9:45 AM ET (1345 GMT), U.S. crude futures traded 1.6% higher at $74.07 a barrel, while the Brent contract rose 1.3% to $75.05.

U.S. Gasoline RBOB Futures were up 1.5% at $2.2895 a gallon.

Helping the tone Friday was the announcement late Thursday from the U.S. Energy Information Administration that the country’s crude inventories fell by just under 7 million barrels last week, while fuel demand soared to 10 million barrels a day in the week ahead of the July 4 national holiday.

This highlighted the recovery in consumption in America, the world’s largest user of petroleum, that’s underpinned this year’s crude rally.

Additionally, oil demand in India, the world’s third largest consumer, recovered significantly in June, according to official data, although it was still 7.6% below the levels seen in June 2019.

That said, the two benchmark crude contracts are on course to post declines of approaching 2% this week, the first weekly decline since mid-May. This follows growing concerns over the ability of the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, to keep its discipline after failing to agree to a production deal earlier this week due to a fight over market share.

“In the absence of an agreement, we think members will increase output and we’ll see the breakdown of a broader deal, which would suggest weaker prices in the longer run,” said ING analyst Warren Patterson, in a note.

Prices have also been pressured by the further spread of the Covid-19 virus, in particular the highly-transmissible delta variant, and the impact this could have on the global recovery.

Japan has declared a state of emergency around its capital Tokyo, meaning no spectators at the upcoming Olympic Games, while a number of southeast Asian countries are struggling with record high caseloads and deaths. But cases are also growing in the countries with highly vaccinated populations, including the U.K. and the U.S.

Later Friday will see the weekly release of the Baker Hughes total of working U.S. oil rigs as well as the CFTC crude oil net speculative positions.

Crude Oil Higher; U.S. Demand Helps Market Rebound

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