U.S. Crude Oil Posts Second Weekly Gain as Gasoline Demand Surges to Pre-Pandemic Highs

As of the latest report, U.S. crude oil has experienced a second consecutive weekly gain, with gasoline demand reaching post-pandemic highs. Although oil prices dropped on Friday, they were up by nearly 2.9% for the week. This increase in oil prices has significantly boosted energy stocks, leading to a 2.4% rise in the sector, effectively positioning it at the top of the S&P 500 for the week.

Surge in Gasoline Consumption

According to data from JPMorgan, gasoline consumption in the U.S. surged to 9.4 million barrels per day, marking the highest level for that time of year since the end of the Covid-19 pandemic.

Closing Energy Prices

• West Texas Intermediate August contract: $80.73 per barrel, down 56 cents, or 0.69%. Year to date, U.S. crude oil has gained 12.6%.
• Brent August contract: $85.24 per barrel, down 47 cents, or 0.55%. Year to date, the global benchmark is ahead by 10.6%.
• RBOB Gasoline July contract: $2.51 per gallon, up 0.52%. Year to date, gasoline is up 19.5%.
• Natural Gas July contract: $2.70 per thousand cubic feet, down 1.31%. Year to date, gas has increased 7.6%.

Predictions and Analysis

JPMorgan analysts anticipate a surge in gasoline demand, with a projected record of 71 million Americans expected to travel during the upcoming July 4th holiday. They also predict a Brent price of $90 per barrel by September as the market tightens due to falling stockpiles in response to summer fuel demand.

On the other hand, some industry experts express caution, with Ryan McKay, senior commodity strategist at TD Securities, warning of a potential fade in the oil rally. He suggests that commodity trading advisors could ease up on their buying if WTI prices fall below $81.73 per barrel and Brent drops under $85.46 per barrel.

Global Oil Demand

Global oil demand has seen a rise of 1.4 million barrels per day this month, driven by U.S. gas consumption and robust summer travel in Europe and Asia. JPMorgan also highlights a 15 million barrel rise in oil inventories in the second week of June as China restocked, although it anticipates drawdowns later this summer.

It is noteworthy that the overall sentiment among analysts hints at a nuanced outlook for the oil market, reflecting both optimistic predictions and cautious warnings, laying the groundwork for potentially significant developments in the coming months.