OIL posted its fourth straight weekly advance, with declining US stockpiles and Hurricane Beryl extending crude’s early-summer rally. West Texas Intermediate fell to settle near US$83 a barrel on Friday (Jul 5), but still cemented a 2 per cent weekly advance. The American benchmark hasn’t risen for four consecutive weeks since August 2023.
The storm is expected to hit northern Mexico or southern Texas on Monday, potentially threatening some oil output.
It also has traders weighing the risk of a “supercharged” hurricane season as its the earliest ever Category 5 to hit the Atlantic.
Adding to the bullishness, a report on Wednesday showed the biggest drop in US stockpiles in almost a year, signalling tightening supplies. Petrol consumption on a four-week basis rose for the first time in a year, said the Energy Information Administration.
“Investors will want to keep an eye on inventories data to see whether the most recent drop was just an anomaly or whether more oil will be drawn from inventories,” said Fawad Razaqzada of City Index and Forex.com in a note on Friday. “If we see more drawdowns, then this should further support the oil-price recovery.”
Still, WTI is seeing resistance at US$84 a barrel, Razaqzada added. Crude may break out of the range if the market gains confidence in stronger demand and tighter supply in the coming months, he said.
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Crude has climbed almost 14 per cent since early June, partly due to a positive outlook for demand over the Northern Hemisphere summer, with bullish, backward-dated timespreads indicating healthy near-term consumption.
Hedge funds affirmed the bullish outlook, staking out the biggest net long position on Brent crude in seven weeks, according to Intercontinental Exchange data.
The recent rally has been aided by positive sentiment across markets, and a stepdown in US hiring and wage growth last month is bolstering expectations of interest rate cuts. But some traders are weighing whether the economic slowdown will hurt US consumers and trim oil demand.
Softer demand in Asia has tempered some of the recent optimism.
It led Saudi Aramco to slash prices of its crude to the region for a second month.
Saudi Arabian seaborne oil flows dropped in June. Geopolitical risks also are showing signs of ebbing, with Israel in peace talks with Hamas. BLOOMBERG
