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Oil futures inched higher on Thursday, adding to recent gains that have pushed both the international and the U.S. benchmark contracts to around 2 ½ month peaks, as a slowdown in supplies and hope for higher demand help prices recover some of their recent losses.
Prices, however, traded off the day’s highs, pressured by profit taking on the heels of oil’s sharp climb, as well as uncertainty over the rate of demand recovery as well as U.S.-China trade tensions.
“Uncertainty about the pace of sates opening up and confusion over the possibility of another stimulus bill is keep the macro player on edge,” Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch.
Renewed U.S.-China trade tensions have also helped to limit gains for oil prices.
“China warned of countermeasures over the U.S. coronavirus sanction threat,” Edward Moya, senior market analyst at Oanda, said in a market update. That prompted “fears that a renewed tit-for-tat attack could derail the global economic recovery trade.”
Read:White House report blasts Chinese ‘malign activities’
“For oil prices to remain supported, the world’s two largest economies need to get along,” said Moya.
July West Texas Intermediate oil CLN20, +0.56% CL.1, +0.56% rose 15 cents, or nearly 0.5%, to $33.64 a barrel on the New York Mercantile Exchange—down from a session high of $34.66. A 4.8% rally on Wednesday pushed the U.S. benchmark to its highest finish since March 10, based on the front-month contracts, according to Dow Jones Market Data.
Meanwhile, global benchmark Brent crude for July delivery BRN.1, +0.55% BRNN20, +0.55% added 17 cents, or 0.5%, to reach $35.92 a barrel on ICE Futures Europe—on track to settle at its highest since March 10.
So far this month, WTI prices, based on the front-month contracts, have climbed more than 78%, while Brent oil has rallied by more than 40%.
In May thus far, the Organization of the Petroleum Exporting Countries and their allies have cut oil exports by some 6 million barrels a day, Reuters reported, citing companies that track crude flows. An agreement between the group of producers, known as OPEC+, calls for cuts of 9.7 million barrels to the end of June, with Saudi Arabia among those who have pledged extra reductions.
Data from the Energy Information Administration on Wednesday was also supportive for prices, showing crude stocks at the storage hub in Cushing, Okla., fell by about 5.5 million barrels for the week. The data also represented a second weekly decline in overall U.S. crude stockpiles, helping to ease concerns over tightening storage space that had contributed to a precipitous downturn in the price of the commodity.
Demand is coming back slowly as business lockdowns gradually end with the coronavirus pandemic receding, while OPEC+ production cut and lower shale output has reduced the excess in supply, Jasper Lawler, head of research at London Capital Group, wrote in a research note Thursday.
Adding further hope to a recovery from the deadly pandemic Thursday, data in Europe showed improvement. In the U.S., the number of jobless claims, on an adjusted basis, stood at 2.44 million last week, but has fallen for seven straight weeks.
Natural-gas futures, meanwhile, held onto earlier weakness after the U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas rose by 81 billion cubic feet for the week ended May 15. That matched the average increase forecasted by analysts polled by S&P Global Platts.
June natural gas NGM20, -3.61% fell 6.6 cents, or 3.7%, to $1.705 per million British thermal units.
Among the petroleum products, June gasoline RBM20, -0.84% declined by 1.4% to $1.0293 a gallon and June heating oil HOM20, -0.13% shed 0.4% to 98.62 cents a gallon.
