Oil Longs End Week Shaken But Unscathed; Eyes on U.S. Gasoline, Covid By Investing.com

© Reuters.

By Barani Krishnan

Investing.com – Oil managed to eke out a gain after starting the week with the worst tumble in 16 months, leaving longs in the market shaken but unscathed. 

What oil bulls need to hope for in coming weeks is that the consumption of U.S. gasoline does not let up in a significant way that will allow reports of Covid cases emerging from the Delta variant to usurp the demand narrative for crude.

New York-traded , the benchmark for U.S. oil, settled up 16 cents, or 0.2%, at $72.07 per barrel. For the week, WTI lost 0.4

London-traded , the global benchmark for oil, settled up 31 cents, or 0.4%, at $74.10. For the week, Brent rose 0.7%.

WTI’s 7% plunge on Monday was the first rude awakening in two months for longs in the market, who in that period managed to push prices up by 25% on the back OPEC+’s success in clearing the crude glut from the pandemic to create so-called tight oil — or supplies at or just below five-year seasonal levels.

The 23-nation OPEC+ — which groups the 13 member Saudi-led Organization of the Petroleum Exporting Countries with 10 other oil producers led by Russia — said last week it will raise supply by 2 million barrels from August through December. 

While it was the first major production increase by a group that had previously cut 10 million barrels a day at the height of the pandemic, the OPEC+ manoeuvre still rattled investors amid a risk aversion on Monday that hit stock markets and almost every other risk asset.

“We need to realize that much of the oil demand that’s being touted is now held up by one thing: U.S. gasoline,” said John Kilduff, founding partner at New York energy hedge fund Again Capital. “Unless jet fuel takes off in a big way again from the restart of global travel, the demand picture could be more implied than real. If gasoline, for any reason, doesn’t perform as expected, oil could have a real problem then.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link


Please enter your comment!
Please enter your name here