Oil futures ended higher Monday, on the heels of three consecutive session declines and a fourth straight weekly loss for U.S. and global benchmark crude prices, driven by worries over the economic outlook.
Analysts said optimism over a potential deal to raise the U.S. federal government’s debt limit and avoid a first-ever default, the potential for the Biden administration to soon repurchase oil for the U.S. Strategic Petroleum Reserve, and the continued shutdown of a key Middle East oil pipeline helped to buoy oil.
Price history
-
West Texas Intermediate crude for June delivery
CL00,
+1.83% CL.1,
+1.83% CLM23,
+1.83%
rose $1.07, or 1.5%, to settle at $71.11 a barrel on the New York Mercantile Exchange. -
July Brent crude
BRN00,
+0.35% BRNN23,
+0.35% ,
the global benchmark, rose $1.06, or 1.4%, to finish at $75.23 a barrel on ICE Futures Europe. Brent and WTI crude both settled lower in each of the past three trading sessions. -
Back on Nymex, June gasoline
RBM23,
+1.78%
rose 1.7% to $2.47 a gallon, while June heating oil
HOM23,
+3.36%
gained 3.1% to settle at $2.38 a gallon. -
June natural gas
NGM23,
+5.03%
rose 4.8% to $2.38 per million British thermal units.
Market drivers
“Despite many headwinds stemming from the global economy, the fundamentals of crude oil remain bullish with two emerging factors leading,” StoneX’s Kansas City energy team, led by Alex Hodes, wrote in Monday’s newsletter.
The 450,000 barrels per day Iraq-Turkey oil pipeline remains shut following Baghdad’s request to restart it last week, the StoneX analysts said. The pipeline has been shut since late March following a court ruling that said Turkey had been allowing the Kurdish region to export oil through the pipeline without permission from Iraq.
Read more: Turkey’s runoff presidential election further complicates the restart of a key oil pipeline
Meanwhile, the Biden administration continues to explore a refill of the SPR later this year after completing a mandated sale in June, the StoneX analysts said.
U.S. Energy Secretary Jennifer Granholm on Thursday said the Energy Department would aim to purchase crude to help rebuild stocks in the SPR next month.
Also in the U.S., a second round of debt-ceiling talks between the White House and congressional leaders appeared set for Tuesday, President Joe Biden said Sunday.
“I remain optimistic because I’m a congenital optimist,” Biden told reporters Sunday in Rehoboth Beach, Del. “But I really think there’s a desire on their part as well as ours to reach an agreement. I think we’ll be able to do it.”
However, House Speaker Kevin McCarthy, R-Calif., on Monday said he and Biden remained “far apart” in terms of a deal.
WTI fell 1.8% last week, while Brent dropped 1.5% to mark a fourth consecutive weekly loss for both benchmarks.
Crude has struggled in recent weeks, pressured by negative headlines around the debt ceiling and global demand expectations, said Tim Waterer, chief market analyst at KCM Trade.
A possible market driver Tuesday is the release of Chinese industrial output and retail sales data, he noted.
“Chinese macro indicators have tended to undershoot in recent weeks, and if Chinese industrial production and retail sales data follow the same pattern it could create a further drag on the oil price,” Waterer said, in emailed comments.
Natural-gas futures, meanwhile, rallied Monday after Baker Hughes reported on Friday a weekly drop in the number of active U.S. drilling rigs, suggesting a slowdown in production activity, Victoria Dircksen, commodity analyst at Schneider Electric.
The total active U.S. natural-gas rigs saw a decline of 16 to stand at 141 for the week, leading to a decline of 17 in the total number of active U.S. drilling rigs to 731, according to Baker Hughes.
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