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U.S. crude oil futures closed at fresh five-month highs on Wednesday, supported by data that showed a sharp decline in U.S. gasoline inventories and strong fuel demand ahead of the summer season.
Crude oil prices have also been increased this week by concerns about the potential for a broader Middle East conflict, after Iran promised retaliation for an Israeli strike in Syria that killed a top general and others.
OPEC+ said it would maintain production cuts until the end of June, as expected, and said some participating countries that have overproduced will submit plans to compensate by the end of the month.
Nymex Front-Month Crude (CL1:COM) for May deliveries is closed +0.3% at $85.43/barrel, and first-month June Brent crude (CO1:COM) ended +0.5% at $89.35 a barrel, the fourth consecutive daily gain and the highest liquidation value since Oct. 27 for both benchmarks.
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Several energy sector names set new 52-week intraday highs in trading today, including Antero Midstream (AM), Canadian Natural Resources (CNQ), CNX Resources (CNX), ConocoPhillips (COP), Crescent Point Energy (CPG) , Delek US Holdings ( DK), DT Midstream (DTM), Energy Transfer (ET), Enerplus (ERF), EnLink Midstream (ENLC), Enterprise Products Partners (EPD), Gulfport Energy (GPOR), Hess Midstream (HESM), HP Sinclair (DINO), International Seaways (INSW), Kinder Morgan (KMI), Liberty Energy (LBRT), Magnolia Oil & Gas (MGY), Marathon Petroleum (MPC), MDU Resources (MDU), MPLX (MPLX), Natural Gas Services (NGS), NRG Energy (NRG), Ovintiv (OVV), PBF Energy (PBF), Permian Resources (PR), Phillips 66 (PSX), Pioneer Natural Resources (PXD), Precision Drilling (PDS), Scorpio Tankers (STNG), Seadrill (SDRL), Shell (SHEL), SM Energy (SM), Southwest Gas (SWX), Suncor Energy (SU), Targa Resources (TRGP), TechnipFMC (FTI), Tidewater (TDW), TotalEnergies ( TTE), Transportadora de Gas del Sur (TGS), Tsakos Energy Navigation (TNP), Vaalco Energy (EGY), Valero Energy (VLO), Vistra (VST), Western Midstream Partners (WES), Williams (WMB), World Kinect (WKC).
The United States reported a 3.2 million barrel increase in domestic crude inventories, but gasoline showed a larger-than-expected decline of 4.3 million barrels, which analyst Jim Ritterbusch said “looked bullish and, although seasonal, the decline was spurred by a summer rhythm.” of demand which likely accounted for a significant build-up of inventory by distributors at the end of the quarter.”
Perhaps more important was the EIA’s estimate of finished motor gasoline supply – i.e. demand – which increased by 521,000 bbl/day to 9,236 million bbl/day, not far from the all-time high of 10,043 million bbl/day in July 2021, Mizuho’s Robert Said Yawger.
“The strong gasoline numbers in today’s EIA report raise the possibility that strong fundamentals around gasoline demand may be able to drive barrels higher in the coming weeks rather than geopolitical headlines, the best kind of rally,” according to Yawger.
Separately, the U.S. Department of Energy said it will not award oil supply contracts for the Bayou Choctaw Strategic Petroleum Reserve site in Louisiana during August and September due to high oil prices.
The DoE said it aims to purchase oil for the SPR at a price of $79 per barrel or lower, lower than the ~$95 per barrel average received for 2022 SPR emergency sales.