Mayra P. Saefong, William Watts, MarketWatch
SAN FRANCISCO/NEW YORK
EnergiesNet.com 06 28 2022
Oil futures ended higher for a second session in a row on Monday as better-than-expected U.S. economic data eased some worries over a potential slowdown in energy demand. Traders also monitored talks by Group of Seven nations on additional moves aimed at targeting Russian crude.
Price action
- West Texas Intermediate crude for August delivery CL.1, 1.21% CL00, 1.22% CLQ22, 1.21% rose $1.95, or 1.8%, to settle at $109.57 a barrel on the New York Mercantile Exchange, the highest front-month finish since June 21, FactSet data show.
- August Brent crude BRNQ22, 1.31%, the global benchmark, added $1.97, or 1.7%, to $115.09 a barrel on ICE Futures Europe, while the most actively traded September contract BRNU22, 1.34% settled at $110.98 a barrel, up $1.88, or 1.7%.
- Back on Nymex, July gasoline RBN22, 1.35% shed 1.2% to $3.8372 a gallon.
- July heating oil HON22, 1.37% fell 3% to $4.2302 a gallon.
- July natural gas NGN22, +0.75% added 4.5% at $6.501 per million British thermal units after a more than 10% loss last week.
Market drivers
Oil rose in the wake of upbeat U.S. economic data, with durable-goods orders up 0.7% in May, compared with a 0.2% advance expected by economists polled by The Wall Street Journal. Separate data also showed pending-home sales rose by 0.7% in May.
Economic data last week was “pretty dismal and weighed on energy products and commodities broadly,” but Monday’s numbers came in better than expected — providing support for oil, said Tyler Richey, co-editor at Sevens Report Research.
He told MarketWatch that last week’s closing low near $104 will be a key support level to watch. If it’s broken, the “technical outlook will shift from bullish to neutral for the weeks and months ahead.”
The G-7 was set to announce an agreement to pursue a price cap on Russian oil, aiming to curb Moscow’s energy revenues, a U.S. official said Monday. The move is part of a joint effort of support for Ukraine that includes raising tariffs on Russian goods and imposing new sanctions on hundreds of Russian officials and entities supporting the four month long war.
“While G-7 discussions focused on ‘capping’ the price of Russian oil offers up supply side support, demand destruction fear is escalating in the background,” analysts at Zaner wrote in a market update Monday, adding that they believe “the embargo of Russian oil supply has been a major failure with major buyers unwilling to punish Russia.”
Carsten Fritsch, commodities analysts at Commerzbank, said it’s “questionable whether countries like India and China will agree to cease purchasing Russian oil, especially as it is trading at a significant discount on the global market price. Instead, India is helping Russia to continue selling its oil despite the West’s sanctions,” he wrote in a note.
Meanwhile, the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, are set to meet this week to review the market and decide on oil output levels.
Some members of OPEC, such as Saudi Arabia and the United Arab Emirates, have the ability to raise production. Overall, the members have failed to collectively reach their production targets.
Reuters reported Monday that a report seen by the news agency showed that OPEC+ cut its 2022 oil market supply surplus forecast to one million barrels per day, from 1.4 million barrels a day.
Read: Don’t expect any surprises from OPEC+, even as recession worries weigh on oil prices
If the EIA data continues to be delayed, “the supply side uncertainty could fuel further gains in the sessions ahead.”— Tyler Richey, Sevens Report Research
Traders continue to await the Energy Information Administration’s release of the weekly U.S. petroleum supply report. The data were due out on Thursday but delayed indefinitely by the EIA. On Monday, the government agency said it discovered a “voltage irregularity” on June 17 that caused hardware failures on two of its main processing servers.
“If the data continues to be delayed, the supply side uncertainty could fuel further gains in the sessions ahead,” said Sevens Report’s Richey.
—The Associated Press contributed to this report.
marketwatch.com 06 27 2022
