The prices of oil dropped on June 11, 2021, but look set for a third weekly rise on the expectations for a demand recovery in China, Europe, and the United States. Rising vaccination rates are constantly leading to an easing of pandemic lockdowns and limitations.
Brent crude futures lost 16 cents (0.22%) to trade at $72.36 a barrel at 0558 GMT after oil markets closed at their highest since May 2019. The U.S. West Texas Intermediate (WTI) crude futures lost 9 cents or 0.13% to trade at $70.20 per barrel. Brent gained 0.5% on Thursday to reach its highest close since October 2018.
As it stands, Brent is set for a weekly gain of 0.7% while WTI is set to rise by 0.8%. the world’s top oil exporter, Saudi Arabia, will now supply full volumes of July-loading crude to its Asian clients, Reuters reported on June 11. Jeffrey Halley, a senior market analyst at OANDA, wrote:
“News that Saudi Arabia has unwound all its voluntary production cuts are circulating in Asia today, and that appears to have temporarily pushed oil prices lower. The reaction is modest, though, and if anything, the price action is bullish. It suggests that the physical market has absorbed extra Saudi production with ease and that demand globally is robust and climbing.”
The gasoline inventories in the United States, the biggest oil consumer in the world, rose by 7 million barrels in the week to June 4. The distillate stockpiles rose by 4.4 million barrels. These increases were much more than the analysts had projected, based on data acquired from the U.S. Energy Information Administration on June 9.
That unprecedented surge spurred profit-taking activity as the prices hit a two-and-half-year high, said Margaret Yang, an oil market strategist. Moreover, data showing road traffic to the pre-COVID-19 levels in North America and most of Europe was encouraging. Analysts said in a note:
“Even the jet fuel market is showing signs of improvement, with flights in Europe rising 17% over the past two weeks, according to Eurocontrol.”
The Organization of the Petroleum Exporting Countries (OPEC) reinforced the view of growing demand, sticking to its projection that demand in 2021 would rise by around 5.95 million barrels per day, which is 6.6% higher from a year earlier. OPEC said during its monthly report on June 10:
“Overall, the recovery in global economic growth, and hence oil demand, are expected to gain momentum in the second half.”
Brent Might Rise To $80 In Northern Summer
Analysts at Goldman Sachs remain quite constructive on the price outlook for the Brent crude oil amid the prospects of growing demand. They mentioned:
“Brent will see higher $80/bbl in Northern summer. Sees jet fuel demand accelerating. Sees continued rise in demand. Demand will hit 90m bbl/day in August. Despite excess capacity, OPEC+ will fall behind the growing demand.”
The open interest in gold futures markets surged for another session, according to preliminary data acquired from CME, this time around 5.3K contracts. Volume followed suit and surged by nearly 110.5K contracts, reversing the previous daily plunge.
This uptick in gold prices was on the back of growing open interest and volume, exposing an uptrend in the short term with the nearest target at the June peaks of about $1,915 per ounce.