Oil futures were higher Monday, attempting a bounce after a fourth straight weekly fall driven by worries over the economic outlook.
Analysts said optimism over a potential deal to raise the U.S. federal government’s debt limit and avoid a first-ever default, the potential for the Biden administration to soon repurchase oil for the U.S. Strategic Petroleum Reserve, and the continued shutdown of a key Middle East oil pipeline were helping to buoy oil.
Price history
-
West Texas Intermediate crude for June delivery
CL00,
+1.80% CL.1,
+1.80% CLM23,
+1.80%
rose $1.20, or 1.7%, to $71.24 a barrel on the New York Mercantile Exchange. -
July Brent crude
BRN00,
+1.77% BRNN23,
+1.77% ,
the global benchmark, was up $1.29, or 1.7%, at $75.46 a barrel on ICE Futures Europe. -
Back on Nymex, June gasoline
RBM23,
+0.50%
rose 1.1% to $2.4571 a gallon, while June heating oil
HOM23,
+2.32%
gained 2% to trade at $2.3525 a gallon. -
June natural gas
NGM23,
+4.63%
rose 3.8% to $2.353 per million British thermal units.
Market drivers
“Despite many headwinds stemming from the global economy, the fundamentals of crude oil remain bullish with two emerging factors leading,” StoneX’s Kansas City energy team, led by Alex Hodes, wrote in Monday’s newsletter.
The 450,000 barrels per day Iraq-Turkey oil pipeline remains shut following Baghdad’s request to restart it last week, the StoneX analysts said. The pipeline has been shut since late March following a court ruling that said Turkey had been allowing the Kurdish region to export oil through the pipeline without permission from Iraq.
Meanwhile, the Biden administration continues to explore a refill of the SPR later this year after completing a mandated sale in June, the StoneX analysts said.
U.S. Energy Secretary Jennifer Granholm on Thursday said the Energy Department would aim to purchase crude to help rebuild stocks in the SPR next month.
Also in the U.S., a second round of debt-ceiling talks between the White House and congressional leaders appeared set for Tuesday, President Joe Biden said Sunday.
“I remain optimistic because I’m a congenital optimist,” Biden told reporters Sunday in Rehoboth Beach, Del. “But I really think there’s a desire on their part as well as ours to reach an agreement. I think we’ll be able to do it.”
WTI fell 1.8% last week, while Brent dropped 1.5% to mark a fourth consecutive weekly loss for both benchmarks.
Crude has struggled in recent weeks, pressured by negative headlines around the debt ceiling and global demand expectations, said Tim Waterer, chief market analyst at KCM Trade.
A possible market driver Tuesday is the release of Chinese industrial output and retail sales data, he noted.
“Chinese macro indicators have tended to undershoot in recent weeks, and if Chinese industrial production and retail sales data follow the same pattern it could create a further drag on the oil price,” Waterer said, in emailed comments.
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