Sign Up for FREE Daily Energy News
  • Stay Connected
  • linkedin
  • twitter
  • facebook
  • instagram
  • youtube2
WEC - Western Engineered Containment
Hazloc Heaters
Copper Tip Energy Services
Hazloc Heaters
WEC - Western Engineered Containment
Copper Tip Energy

Oil Near $72 as Investors Size Up Fed’s Shift, Lower Stockpiles

English Français 简体中文
These translations are done via Google Translate
(Bloomberg) Oil traded near $72 a barrel as investors weighed signs of a tightening global crude market against the Federal Reserve’s decision to start moving toward an end of its ultra-easy monetary policy.West Texas Intermediate was 0.4% lower, and Brent also fell. On Wednesday, Fed Chairman Jerome Powell said officials would begin talks on tapering massive asset purchases, while penciling in two rate hikes by the end of 2023. That aided the dollar, hurting the appeal of commodities priced in the currency, while hitting sentiment in wider markets.

WTI has surged this year as holdings at the Cushing hub get drawn down

Still, the oil market continues to display signs of strength as the pandemic ebbs. Russia’s Sokol crude traded at its strongest level since February 2020, while key swaps tied to the North Sea market that prices much of the world’s crude have rallied in recent days.

A U.S. government report Wednesday offered the market its latest bullish fillip, with domestic crude stockpiles sinking as refinery demand picks up. Saudi Energy Minister Prince Abdulaziz bin Salman told a conference that the cautious approach taken by OPEC+ to reviving supply was paying off, indicating that he’s sticking to that position, with the group set to meet July 1 to decide its next steps.

“Dollar strength and lower inflation expectations and a general reduction in risk appetite has for now reduced investment appetite in crude oil,” said Ole Hansen, head of commodities strategy at Saxo Bank. “The oil market is not only driven by fundamentals which are currently supportive, but also financial investors buying oil for other reasons, such as momentum, inflation hedge and dollar plays.”

  • WTI for July delivery was 0.4% lower at $71.83 a barrel at 8:40 a.m. in New York.
  • Brent for August settlement fell 0.6% to $73.96

The outlook remains constructive, according to Citigroup Inc., which said Brent could soon top $80 a barrel. Pent-up leisure demand, enabled by vaccine roll-outs, would underpin global consumption this summer, the bank said in a note.

The market’s pricing patterns remain firm, with near-dated contracts above those further out. Brent’s prompt timespread was 85 cents a barrel in backwardation, more than double the 42 cents seen two weeks ago.

“Keep riding the bull-wave in oil,” said Bjarne Schieldrop, chief commodities strategist at SEB AB. “OPEC+ is holding a steady course keeping the market in the tight side, driving inventories steadily lower while demand keeps rising back toward normal.”

Related coverage:
  • Tehran probably won’t be able to bolster production or release stored supplies until 4Q as the nuclear accord proves elusive, consultant Energy Aspects said in a report.
  • Iran said it may renew a key monitoring agreement, potentially buying more time to revive a 2015 atomic deal.
  • OPEC+ could easily agree to boost output, according to Mele Kyari, head of Nigeria’s state-run oil company.

Share This:

More News Articles

New SHOWCASE Directory Companies


Delta Remediation Inc.
The Coverall Shop
Muddy Boots
Axis Communciations
Smart-Project Management Inc. / Trusted Pipeline Advisor
Vista Projects Limited
Payload Technologies Inc.