William Watts , MarketWatch

NEW YORK
EnergiesNet.com 06 08 2022

Oil futures ended a choppy session with gains Tuesday, putting the U.S. benchmark at a 3-month high just below $120 a barrel as investors await storage data.

Price action

• West Texas Intermediate crude for July delivery CL.1, +0.48% CL00, +0.48% CLN22, +0.48% rose 91 cents, or 0.8%, to close at $119.41 a barrel on the New York Mercantile Exchange, the highest finish for a front-month contract since March 8.
  
• August Brent crude BRN00, +0.32% BRNQ22, +0.32%, the global benchmark, rose $1.06, or 0.9%, to settle at $120.57 a barrel on ICE Futures Europe, its highest finish since May 31.
  
• Back on Nymex, July gasoline RBN22, -1.33% fell 0.8% to $4.1577 a gallon, continuing a pullback after ending Friday at a record.
  
• July heating oil HON22, -0.50% dropped 0.9% to $4.3206 a gallon.
  
• July natural gas NGN22, +0.61% edged down 0.3% to close at $9.293 per million British thermal units after posting its highest finish since Aug. 1, 2008, on Monday.

Market drivers

Crude oil saw choppy price action but remained supported as demand revives with China ending COVID-19 lockdowns and as concerns remain over tight supplies given sanctions and embargoes are seen taking Russian crude off the market.

Traders will be watching weekly inventory data from the American Petroleum Institute, an industry trade group, late Tuesday, followed by official figures from the Energy Information Administration on Wednesday.

The return of significant U.S. refinery capacity likely contributed to a seasonal bump in U.S. refined product stocks in the week that ended June 3, according to a survey of analysts by S&P Global Commodity Insights.

The survey found expectations for EIA to show a drop of 2.9 million barrels in crude inventories, while gasoline stocks were seen up 2 million barrels and distillate inventories up 800,000 barrels.

Analysts at Goldman Sachs, in a Tuesday note, said that a “political” surplus created in April and May as a result of only modest Russian export declines, massive releases from strategic oil reserves by several countries, and China’s COVID-19 lockdowns is already ending.

See: Goldman Sachs expects oil prices to surge to nearly $140 a barrel this summer — but it will feel like $160

Meanwhile, a decision last week by OPEC+ — the Organization of the Petroleum Exporting Countries and its allies — to increase output did little to cool crude prices. OPEC+ agreed to raise its output target by 648,000 barrels a day in July and August, up from the 432,000 barrel-a-day increments it had previously delivered. But OPEC+ has failed to meet its production targets recently, analysts have noted, and doubt the group’s ability to meet the larger target.

marketwatch.com 06 07 2022