Oil Gains With European Stocks on Expectation of Tighter Market

Jul 21, 2021

(Bloomberg) Oil rose in tandem with European equities, recouping some of the week’s earlier losses amid speculation that global markets will eventually tighten.West Texas Intermediate crude added 1.8%, rebounding for a second day after fears over the spread of the Covid-19 delta variant triggered a price collapse on Monday. Despite the virus’ threat to demand and plans by the OPEC+ coalition to revive supply, analysts widely expect global inventories will continue to contract as economic activity picks up during the rest of the year.

WTI futures erase earlier loss, but are down sharply this week

“Risk-on is the main driver,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “I still believe oil fundamentals themselves are supportive, but the last 72 hours were primarily driven by shifts in investors’ attitude to risk.”

There are signs that investor money is beginning to flow back into the crude market. The U.S. Oil Fund ETF, or USO, saw its biggest inflow since May this week. Other crude exchange-traded products have also received new money.

ROO.AI Oil and Gas Field Service Software

Futures dipped earlier Wednesday after the American Petroleum Institute was said to report an 806,000-barrel gain in U.S. crude inventories. If confirmed by government data, that would be the first weekly increase since May. But the API also reported a large decline at the key pricing point of Cushing, Oklahoma.

Prices:
WTI for September delivery advanced $1.19 to $68.39 a barrel at 2:07 p.m. London time Brent for the same month rose $1.21 to $70.56 a barrel

The API also reported a 3.31 million-barrel weekly build in gasoline inventories, even as a Bloomberg survey predicted a draw of more than 1 million barrels. Meanwhile, demand for the motor fuel in the U.S. rose 2.2% last week after two weeks of declines, according to Descartes Labs.

Related coverage:
Singapore is facing the greatest competition yet to its status as the dominant marine fuel supplier in Asia, with China luring more ships to its shores after expanding ports and refineries. EOG Resources Inc. has been unusually early in locking in prices for its 2022 crude production, signaling that shale producers could be aggressively hedging future sales.