Oil Holds Three-Day Advance on Outlook for Tighter Global Market

Saket Sundria
·2 min read

(Bloomberg) -- Oil held the bulk of a three-day advance to trade above $71 a barrel on optimism that rising demand will tighten the global market.

West Texas Intermediate was little changed in early Asian trading after rallying more than 8% in the preceding three sessions. The run of gains means prices are little changed on the week, having recouped Monday’s slump, when crude plunged amid concern the spread of the delta coronavirus variant would crimp consumption just as the OPEC+ alliance moved to add more barrels.

Crude has rallied this year as the rollout of vaccines permits economies to reopen, stoking energy demand and draining the glut that built up during the pandemic. While the emergence and spread of the highly infectious delta variant has set back that process, especially in parts of Asia, investors are betting the broader positive narrative remains intact. Data this week showed gasoline demand is essentially back to normal in many of the biggest oil-consuming countries, as well as lower crude holdings at the key Cushing hub.

Still, challenges remain. The U.S. is “at another pivotal moment,” with Covid-19 cases once again climbing and beds at some hospitals filling up, according to the Centers for Disease Control and Prevention. Elsewhere, the number of infections in France has more than doubled in the past week, and South Korea has extended social-distancing steps amid record number of cases.

While there is growing concern over delta’s impact, “the oil complex may have overreacted,” said Vandana Hari, founder of Vanda Insights in Singapore. “That is not to say that the sanguine demand optimism has fully returned. It will remain vulnerable to the slightest of worries over pockets of resurgence. Broadly, that could keep a lid on prices, not too far from current levels.”

The Organization of Petroleum Exporting Countries and its allies plan to add 400,000 barrels a day to the market in August and in subsequent months until supply cuts imposed at the outset of the pandemic have been fully reversed. Additional supplies this half may come from Iran should Tehran manage to strike a nuclear deal permitting U.S. sanctions on its crude to be lifted.

Brent’s prompt time spread was 62 cents a barrel in backwardation on Friday. That’s a bullish pattern -- with near-dated prices above those further out -- and unchanged from the level seen a week ago.

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2021 Bloomberg L.P.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting

Recommended Stories

  • Floods wreck towns, but Europe's wind power goals tangled in red tape

    Climber Tassos Baltas points up at a 22-metre high mast which is monitoring wind speeds on the summit of a rocky hillside on the Greek island of Evia and declares, "This mast which has been installed next to us is an omen of catastrophe." The mountaineer's views are one of a host of obstacles to efforts to boost wind power across the European Union. As parts of Europe reel from devastating flooding and Germany's Chancellor Angela Merkel says governments must redouble their efforts to tackle the impact of climate change, developers and governments are racing to capture green power investment.

  • Rochester mayor, husband, plead not guilty to gun charges

    Rochester Mayor Lovely Warren pleaded not guilty Wednesday to charges stemming from a police raid that allegedly turned up a rifle and pistol, and her 10-year-old daughter alone, in the home she shares with her husband. A grand jury indicted Warren and her husband Timothy Granison last week on a felony count of criminal possession of a firearm, as well as misdemeanor counts of endangering the welfare of a child and having unsecured guns in a home. Warren's attorney, Joseph Damelio, said the mayor didn't know about the guns and that he was eager to review the prosecution's evidence.

  • Oil futures settle sharply higher amid tight supplies at the U.S. storage hub

    Oil futures rallied Wednesday, with U.S. prices recouping much of their recent losses to finish back above the $70-a-barrel mark. Prices have rebounded after suffering a steep drop on Monday of more than 7%, the biggest daily decline of the year as the spread of the delta variant of the coronavirus threatened the outlook for oil demand. The Energy Information Administration on Wednesday reported an unexpected weekly rise in U.S. crude supplies, but also revealed that stocks at the Cushing, Okla.

  • Ex-Merrill Trader Says He Learned to Spoof From Pacilio, Bases

    (Bloomberg) -- A former trader at Bank of America Corp.’s Merrill Lynch unit told a federal jury in Chicago that he learned how to manipulate the price of precious metals from two more senior traders in the bank’s New York office, John Pacilio and Edward Bases.Harnaik Lakhan said he used Merrill’s internal computer system to watch Pacilio and Bases, who are on trial for alleged spoofing, issue buy and sell orders they didn’t intend to be filled, pushing prices up or down to make it profitable fo

  • Kate Winslet Applauds Courage of Actors Who Have Revealed Harassment and Abuse

    "This is a time of change, of getting rid of those horrendous things, standing together and moving forward," she tells PEOPLE

  • Boise man who followed woman from bar, strangled her faces up to 5 years in prison

    The judge retained jurisdiction in the case, meaning that Cash Adolph, 52, could serve only a year under a rider.

  • Dollar eases amid recovery in risk appetite with Fed meeting in focus

    The dollar was set to end the week close to where it started following a roller-coaster week in which currencies were tossed around by shifting risk appetite, with the market's focus now shifting to next week's U.S. Federal Reserve meeting. The dollar index is on track to advance 0.1% for the week, having barely budged overnight to stand at 92.782 in Asia on Friday. Meanwhile, the euro was 0.2% lower over the period at $1.1779 after the European Central Bank pledged to keep interest rates at record lows for even longer, as widely expected.

  • How to take a road trip in an electric car without the range anxiety

    An EV owner pushes the limits of his range to find the potential problems of California's growing EV infrastructure.

  • Oil Gains With Robust Global Demand Tightening Crude Market

    (Bloomberg) -- Oil rose to the highest in a week amid expectations that recovering demand from the U.S. to India and Europe will further tighten global crude markets.Futures in New York climbed 2.3% on Thursday after posting the biggest gain in three months on Wednesday. Gasoline demand is essentially back to normal in many of the biggest oil-consuming countries, with road traffic data showing a similar trend. Plus, over the past two weeks, Europe’s air traffic came close to two-thirds of flight

  • Top Hedge Fund Gains 400% as China Battles Commodity Prices

    (Bloomberg) -- When China’s government started paying more attention to surging commodity prices a few months back, hedge fund manager Richard Lee’s trading models told him a correction was imminent.Inventories of reinforced steel bars, a key construction material, started rising before the arrival of the summer slow season, and China’s State Council had warned repeatedly on price increases, he said in an interview.“Our models were flashing strong signals of a reversal,” said Lee, the general ma

  • Why This Penny Gold Stock Cracked Today

    What happened Shares of IAMGOLD (NYSE: IAG) dropped sharply today -- as much as 13.6% by 10:15 a.m. EDT. The gold stock regained some ground as the day progressed but was still down 9.8% at 1:25 p.m. EDT.

  • Gold Price Prediction – Gold Prices Edge Lower and Continue Rangebound Trade

    Yields move higher

  • Silver Price Daily Forecast – Resistance At $25.30 Stays Strong

    Silver did not manage to settle above $25.30 and declined towards $25.00.

  • Gold Price Forecast – Gold Markets Continue to Consolidate

    Gold markets have fallen a bit during the course of the trading session on Wednesday to reach down towards the bottom of the candlestick from Monday. With an alternating pattern of hammers and shooting stars, it looks as if we are forming a tight range.

  • Gold hits 1-week low as risk appetite resumes

    Gold dropped for a second straight session to its lowest in more than a week on Wednesday, as risk appetite resumed with equities and bond yields rebounding to curb safe-haven bullion bids. Spot gold fell 0.4% to $1,803.41 per ounce by 12:27 p.m. EDT, having hit a low since July 12 of $1,793.59. Surging Delta variant COVID-19 infections, which raised fears over a stalling global economic recovery, had weighed on risk sentiment and sparked an equities sell-off on Monday, but stocks and bond yields have since recovered, dimming safe-haven bullion's appeal.

  • Natural Gas Price Forecast – Natural Gas Markets Continue to Look Elevated

    Natural gas markets have gone back and forth during the course of the trading session on Thursday, as we continue to see a lot of demand due to the heatwave out West.

  • Gold Price Forecast – Gold Markets Continue Same Choppy Pattern

    Gold markets initially fell during the trading session on Thursday to reach down towards the bottom of the overall rectangle that we are trying to form.

  • Tech Stocks Lead S&P 500 Gains; Treasuries Climb: Markets Wrap

    (Bloomberg) -- A rebound in technology companies drove stocks to the brink of a record, with traders assessing another batch of economic and earnings reports. Treasuries climbed.The S&P 500 had its biggest three-day advance since April, but gains paled in comparison to the previous two sessions. Giants Apple Inc. and Microsoft Corp. rallied, while firms closely tied to a broader reopening of businesses underperformed. In late trading, Twitter Inc. jumped after a strong outlook, while Intel Corp.

  • Gold prices finish higher as U.S. Treasury yields decline

    Gold prices finished higher on Thursday, finding support from a decline in U.S. Treasury yields. The precious metal "continues to remain stuck" around the $1,800 level and that will probably remain the case until after next week's Federal Reserve meeting on monetary policy, said Edward Moya, senior market analyst at Oanda. August gold rose $2, or 0.1%, to settle at $1,805.40 an ounce. Prices on Wednesday had marked the lowest most-active contract finish since July 8.

  • The Jury Is Still Out on This Market

    The big question about the market now is: "Is Tuesday's advance merely a rally to resistance for the indices that fail or is it the beginning of a recovery?". All the major equity indices closed higher Tuesday with positive internals on the NYSE and Nasdaq as all closed at or near their intraday highs. On the plus side, S&P 500 (see above) did close back above its 50-day moving average but remains in a near term downtrend.