Energy
Monday, June 24th, 2024 3:24 pm EDT
Key Points
- Crude oil futures started the last week of June slightly higher, signaling a potential monthly gain amid strengthened gasoline demand in the US and renewed geopolitical tensions in the Middle East. Despite a Friday pullback, oil prices closed the week nearly 3% higher overall, with West Texas Intermediate (WTI) and Brent crude set for monthly gains of 5.3% and 4.7% respectively.
- U.S. crude oil rebounded from its worst month of the year in May, buoyed by expectations of a tightening market due to summer fuel demand. Current energy prices include WTI at $81.08 per barrel (up 35 cents, or 0.43% for the August contract) and Brent at $85.48 per barrel (up 24 cents, or 0.28% for the August contract). RBOB Gasoline stands at $2.51 per gallon (down 0.29% for the July contract), reflecting a year-to-date increase of 19.2%, while Natural Gas is priced at $2.74 per thousand cubic feet (up 1.55%), with a year-to-date gain of 9.2%.
- Analysts attribute the recent strength in oil prices to growing confidence that global oil inventories will decrease significantly during the summer in the northern hemisphere. This optimism is reinforced by declines in U.S. oil, gasoline, and distillate inventories, along with a surge in gasoline consumption to 9.4 million barrels per day, the highest level since the pandemic’s onset. Geopolitical tensions, especially along the Israel-Lebanon border, are also contributing to supply risks, which could further support oil prices in the near term despite potential long position liquidation if WTI falls below $81 per barrel.
In the last week of June, crude oil futures began with modest gains, signaling a potential monthly increase amidst factors such as rising gasoline demand in the U.S. and renewed geopolitical tensions in the Middle East. Despite a pullback on Friday after a period of gains, both West Texas Intermediate (WTI) and Brent crude are set to close the month with gains of 5.3% and 4.7%, respectively, underscoring a rebound from May’s downturn. U.S. crude oil had faced its worst month earlier in the year but has recovered on expectations of tightening market conditions due to summer fuel demand.
As of the latest updates, West Texas Intermediate for the August contract traded at $81.08 per barrel, up 35 cents or 0.43%, contributing to a year-to-date increase of 13%. Meanwhile, Brent crude stood at $85.48 per barrel, a rise of 24 cents or 0.28%, maintaining an 11% increase year-to-date. In the gasoline sector, the July contract for RBOB Gasoline was priced at $2.51 per gallon, slightly down by 0.29% but showing a robust year-to-date growth of 19.2%. Natural gas also saw an uptick, with the July contract at $2.74 per thousand cubic feet, marking a 1.55% increase and a year-to-date gain of 9.2%.
Analysts attribute the recent strength in oil prices to growing confidence that global oil inventories will decline notably during the summer months in the northern hemisphere. Tamas Varga of PVM highlighted this sentiment, emphasizing the expected plunge in inventories. Ryan McKay from TD Securities echoed this sentiment, pointing out that supply risks have come back into focus, particularly with escalating tensions along the Israel-Lebanon border. These geopolitical developments, coupled with ongoing output cuts by OPEC+, have bolstered market sentiment towards higher prices, although concerns persist about the potential for funds to liquidate their positions if WTI dips below $81 per barrel.
Major financial institutions such as Goldman Sachs, JPMorgan, and Citi have predicted that inventories will indeed begin to decrease as fuel demand strengthens and OPEC+ continues its production cuts until October. Recent data showing declines in U.S. oil, gasoline, and distillate inventories, alongside a surge in gasoline consumption to pre-pandemic levels, further underpin expectations of a tightening market and sustained upward pressure on oil prices in the near term.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/06/24/crude-oil-prices-today.html
