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Oil posted its fourth straight monthly gain as steady demand and tight supplies calmed concerns that a new wave of COVID-19 infections would cripple energy consumption.
Futures in New York ended the week 2.6 per cent higher. While cases of the virus’s delta variant have surged in recent weeks, mobility and other data point to strong demand in key economies that traders are watching. India posted the biggest gain in driving activity after restrictions were rolled back.
“All the data right now is really positive,” said Rebecca Babin, senior energy trader at CIBC Private Wealth, US. “That’s what you’re seeing. We do have tight supplies right now, so it’s really hard for the commodity to pull back.”
Oil futures are closing out a volatile July that saw prices whipsawing as the pandemic threatened to derail the economic recovery. Crude supplies are expected to remain tight through the end of the year, supporting the recent rally.
“It’s going to mostly grind higher,” said John Kilduff, a partner at Again Capital, adding that he sees West Texas Intermediate prices at US$80 a barrel in the near-term.
- West Texas Intermediate for September delivery rose 33 cents to settle at US$73.95 a barrel on the New York Mercantile Exchange
- Brent for September, which expires Friday, added 28 cents to end session at US$76.33 on the ICE Futures Europe exchange
- Brent for October rose 31 cents to US$75.41
Executives at Exxon Mobil Corp. and Chevron Corp. reiterated that spending would remain low and offered no signs of returning to growth-at-all-costs mode. Exxon also said surplus cash will go towards debt reduction. Chevron said it is “cautiously” watching OPEC and its allies for further output.
On Friday, two crew members were killed when an oil products tanker with links to Israel came under attack off the coast of Oman. Such incidents can add to price volatility in a tightly supplied market.
Other market news:
- U.S. oil consumption is rushing back much faster from the pandemic slump than first predicted as Americans are hitting the road, unleashing a burst of pent-up travel demand
- Chevron is cautiously watching OPEC and its allies because they have the capacity to export millions of additional barrels while COVID-19 continues to threaten the economic growth that spurred this year’s crude rally
- Traffic data shows deserted streets in Thailand and snarls of vehicles in India