Oil futures rose early Thursday, taking back ground lost the previous session to trade near three-month highs as investors looked for further tightness in global supplies of crude.
Price action
-
West Texas Intermediate crude for September delivery
CL00,
+0.93%CLU23,
+0.93%
rose 67 cents, or 0.8%, to $79.45 a barrel on the New York Mercantile Exchange. -
September Brent crude
BRNU23,
+0.78%,
the global benchmark, rose 51 cents, or 0.6%, to $83.43 a barrel on ICE Futures Europe. October Brent
BRN00,
+0.74%BRNV23,
+0.74%,
the most actively traded contract, was up 49 cents, or 0.6%, at $83.05 a barrel. -
Back on Nymex, August gasoline
RBQ23,
+0.62%
rose 0.3% to $2.915 a gallon, while August heating oil
HOQ23,
+0.66%
gained 0.3% at $2.851 a gallon. -
August natural gas
NGQ23,
-0.90%
declined 2.2% to $2.606 per million British thermal units.
Market drivers
Oil pulled back from three-month highs in Wednesday’s session after weekly government data showed smaller-than-expected declines in inventories of crude, gasoline and distillates.
Crude was back on the rise Thursday. Bullish analysts contend tight supplies and optimism over the outlook for the global economy as central banks appeared to approach the end of an aggressive cycle of rate hikes should keep prices supported.
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A roughly $10-a-barrel rise over the last four weeks “has been driven primarily by OPEC+’s voluntary production cuts announced in April and implemented in May,” strategists at UBS wrote in a Thursday note. Some recent unplanned production outages during the demand-heavy Northern Hemisphere summer months also helped, they said, predicting markets should tighten further as Saudi Arabia’s extra, voluntary 1 million barrel-a-day production cut for July and August comes into effect.
The UBS analysts projected a market deficit of 700,000 barrels a day in June and around 2 million barrels a day in July and August.
“We expect oil prices to trend even higher once these deficits become visible in on-land oil inventories,” they wrote. “The size of the market deficit in September will depend, among other factors, on if the extra 1mbpd Saudi production cut is extended into September.”
