Sign Up for FREE Daily Energy News
CDN NEWS  |   US NEWS  | TIMELY. FOCUSED. REVELANT. FREE
BREAKING NEWS:

Hazloc Heaters
EnergyNow Subscription Offer
EnergyNow Subscription Offer
Hazloc Heaters

Oil in New York Tops $40 With Demand Recovery Accelerating


By Alex Longley and James Thornhill

(Bloomberg) Oil rallied as stronger consumption continued to push physical markets higher, even as many countries struggle to bring the coronavirus under control.

Futures in New York traded above $40 a barrel on Friday and are up about 11% this week. Oil traders Vitol Group and Trafigura Group and exporter Saudi Aramco all talked up the strength of the demand recovery in recent days, and prices for some of the world’s major oil products have begun to roar higher.

Gasoline futures in the U.S. moved into backwardation for the first time in three months on Thursday, a bullish signal indicating supplies are tightening as the summer driving season gets under way. Meanwhile, swaps in the North Sea market that prices much of the world’s crude jumped on Thursday as traders posted several bids for cargoes but only one willing seller emerged.

Crude set for weekly gain after setback last week

Though the outlook for crude has brightened in recent days, a potential resurgence of the virus is clouding the long-term outlook. Traffic in Beijing has plunged as authorities battle a fresh outbreak, while some U.S. states are still seeing cases surge. Still, OPEC+ gave reassurance on output cuts on Thursday, finalizing a deal with Iraq — a habitual quota cheat — to compensate for overshooting its production target in May.

“OPEC+ has done a good job turning things around and stronger demand also helps,” said Carsten Fritsch, an analyst at Commerzbank AG.

Prices:
  • West Texas Intermediate for July rose 3.4% to $40.15 a barrel as of 10:09 a.m. London time
  • Brent for August advanced 3.1% to $42.78 a barrel
    • The August contract was 12 cents higher than September futures, and is trading above every month through November, indicating supplies are tightening
Brent's prompt spread in backwardation for first time since March

Apart from the virus, the other major threat to oil prices comes from suppliers re-opening shuttered production too early. U.S. producer Continental Resources Inc. said Thursday it will start bringing back some of its idled oil output next month, but will keep about 50% curtailed.

Equities Climb

Crude also got a boost Friday from equity markets in Europe and the U.S., which gained following the latest breakthrough in trade negotiations between America and China and stimulus talks in Europe. Crude has been embroiled in equity-market sentiment for much of this week.

“Oil prices find a lot of support in line with equity markets,” said ABN Amro’s senior energy economist, Hans van Cleef. “Risk-on mode is supportive for commodities.”

Other oil-market news
  • The cluster of oil tankers off China’s coast is growing and the vessels are waiting longer to offload their cargoes amid a lack of onshore storage space after a buying spree earlier this year.
  • Total SA, Europe’s biggest oil refiner, is making an unusual foray into the North Sea crude market as a recovery in the continent’s fuel demand gathers pace at a time when the number of cargoes available from nearby regions is becoming constrained.
  • The U.S. Treasury Department levied sanctions on Mexican trading company Libre Abordo SA de CV for buying Venezuelan oil via oil-for-humanitarian-aid agreements with the embattled country.


Share This:



More News Articles


New SHOWCASE Directory Companies

 

Scovan Engineering
Hazloc Heaters
Bedrock Automation
Dycat Solutions