Crude oil higher; U.S. demand stays healthy ahead of OPEC meeting
Investing.com -- Oil prices rose Friday, heading towards their second consecutive week of gains on signs of tightening U.S. supply and improving fuel demand in the world’s largest oil consumer.
By 09:15 ET (13:15 GMT), U.S. crude futures traded 1.4% higher at $72.82 a barrel, while the Brent contract rose 1.1% to $77.10 a barrel.
Both benchmarks are on course for gains of close to 2% this week on expectations of tighter U.S. supplies as the travel-heavy summer season approaches, boosted by an unexpected, hefty fall in U.S. crude oil inventories last week.
U.S. commercial crude oil inventories fell by 12.5 million barrels a day, the largest weekly decline since November, while ING noted that “the 4-week average for implied gasoline demand remains just above 9MMbbls/d, which is the highest post-COVID level seen for this time of year.”
The U.S. Transportation Security Administration screened just over 2.6 million passengers on Thursday, the highest number since the COVID-19 pandemic, with the Federal Aviation Administration estimated more than 51,000 flights took place Thursday, the highest number during the busy Memorial Day travel period.
Adding to the optimism is a report by Reuters indicating that congressional Republicans and the White House are very close to agreeing on a deal to lift the U.S. debt ceiling before the June 1 deadline, averting a catastrophic default that would severely hit global economic activity, and thus crude demand.
That said, gains are limited amid uncertainty over what a group of top producers will decide in terms of future output at their next meeting on June 4.
Saudi Arabian Energy Minister Prince Abdulaziz bin Salman warned short sellers to "watch out" earlier in the week, raising expectations that Saudi Arabia, the de facto leader of the OPEC+ cartel, would seek another production cut in order to boost prices.
In April, OPEC+ surprised the market by announcing a 1.7 million-barrel-per-day cut, on top of a prior undertaking to shed 2 million barrels daily.
Oil prices jumped sharply on that announcement, but crude prices only went up for two weeks, before turning lower over four weeks, erasing some 15%.
Optimism that the group would seek another price boost by cutting output again was hit Thursday after Russian Deputy Prime Minister Alexander Novak said he didn’t expect the group to introduce any new steps next month.
Additionally, the Federal Reserve's preferred consumer inflation measure unexpectedly accelerated in April, data showed Friday, adding to the likelihood that the U.S. central bank keeps interest rates higher for longer, weighing on future economic activity.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.
Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb
Drop an image here or