Oil futures: US data boosts prices, Brent back above $71/b

5 Aug 2021

Quantum Commodity Intelligence - Crude oil futures were boosted in late afternoon European trading by positive US macro data but were still far away from clawing back the week’s sharp losses despite a rise in geopolitical tensions in the Middle East.

Front-month October ICE Brent futures were trading at $71.16/barrel (1601 GMT), compared to Wednesday’s settle of $70.38/b.

At the same time, September NYMEX WTI was trading $68.96/b, versus Wednesday’s settle of $68.15/b.

Front-line Brent and WTI are still down this week by around 4.3% and 5%, respectively, despite the rally late Thursday.

New unemployment claims data for the US released in the afternoon showed a second week of decline, while ongoing claims hit a pandemic low, helping to trigger gains for both equities and oil prices, alongside separate data indicating an expanding US trade deficit.  

Brent prices had approached $73/b earlier in the day but gains were stemmed by the steep build in US crude stocks and growing concerns over the spike in Covid-19 cases leading to a demand slowdown.

“Flights in and out of Beijing have been cancelled, which has already prompted China’s National Petroleum Corp to warn that 5% of short term oil demand could be wiped out,” noted Daniel Hynes, senior commodity strategist at ANZ.

China’s crackdown on travel as it attempts to halt the spread of Covid-19 has already knocked out some 300,000 barrels per day of jet fuel consumption and 150,000 bpd of domestic gasoline demand, said energy consultancy FGE in a report Thursday.

US Energy Information Administration statistics showed commercial crude stocks gained 3.6 million barrels to 439.2 million, although this was in part offset by a 5.3-million barrel draw in gasoline stocks.

In the Middle East, Israeli warplanes launched retaliatory strikes on south Lebanon early Thursday, hours after two rockets fired from the area landed in Israel.

This followed heightened tensions in the region after the brief hijacking of the Panama-flagged Asphalt Princess, which has been widely blamed on Iran.

Israel’s defense minister, Benny Gantz, has stated that his country is prepared to attack Iran and that the Islamic republic’s menace requires a worldwide reaction, according to to the Washington Post.