Oil Prices Manage Weekly Gain As Global Crude Demand Holds Up

By Jill R. Shah on 07/25/2021

(Bloomberg) – Oil posted its first out of three weekly gain amid signs that global demand is holding up despite fears that the further spread of the virus could block the recovery.

Futures in New York rose 0.2% last week, fully recovering from a Monday sell-off fueled by the rapidly spreading delta variant. US fuel demand and road traffic to Asia and Europe remain resilient, underscoring expectations that the recovery has not derailed and global inventories will continue to shrink.

“The point is, we’re not going to see, at least in the US and Europe, a massive return to strict foreclosure,” said Ed Moya, senior market analyst at Oanda Corp.

Crude has risen nearly 50% this year as ongoing vaccination campaigns have propelled reopens. This week’s data showed that demand for gasoline has essentially returned to normal in many of the top-consuming countries. Meanwhile, shale producers in OPEC + and the United States have shown discipline in returning to the closed supply market.

The 7.5% price drop on Monday came just a day after the Organization of the Petroleum Exporting Countries and its Saudi-Russian-led allies finalized a deal to gradually restore production they have. interrupted during the pandemic. The modest increase in OPEC + allayed fears of oversupply.

“Everyone thinks they’re going to flood the market and then they take a step back and realize that, hey, they’re adding because the supply is exhausted,” said Phil Streible, chief market strategist at Blue Line. Futures LLC in Chicago.

The recent drop in prices is a buying opportunity, and Brent prices are expected to hit $ 100 a barrel next year, a group of analysts from Bank of America Corp. said. in a recent note to customers.

Prices:

• West Texas Intermediate crude for September delivery added 16 cents to settle at $ 72.07 a barrel in New York on Friday.
• Brent for the same month rose 31 cents to end the session at $ 74.10 a barrel.

This week, Schlumberger and Baker Hughes Inc. suggested that the rebound in the shale zone in the United States would likely slow this year as companies curb spending. Despite a strong recovery in crude prices in 2021, the shale industry is largely resisting the addition of new offerings.

Yet the virus continues to pose a challenge. The Olympics opening ceremony kicked off at a nearly empty stadium in Tokyo, amid a record number of new games-related infections. In China, there are signs that a new outbreak at Nanjing City Airport in eastern China has quietly spread to other provinces.

Associated coverage:

• The United States is bathed in so much kerosene that even this summer’s surge in air travel cannot save the market.
• Reliance Industries Ltd., run by Asia’s richest man Mukesh Ambani posted worse-than-expected quarterly profits as the brutal second wave of Covid-19 in India triggered local lockdowns and hurt its business energy and retail.
• The Vitol Group has paid out a record $ 2.9 billion to its executives and staff through share buybacks so far this year after the world’s largest independent oil trader registered its shares. best results in its history in 2020.