Crude futures pushed to multiyear highs June 8, with front-month NYMEX WTI settling above $70/b on the back of strengthened US energy demand outlooks and signs of continued OPEC+ supply discipline.
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NYMEX July WTI settled up 82 cents at $70.05/b, and ICE August Brent climbed 73 cents to $72.22/b.
It was the highest front-month settle for WTI since Oct. 16, 2018, while Brent was last higher on May 16, 2019.
A morning price rally accelerated in afternoon trading after the US Energy Information Administration, in its monthly Short-Term Energy Outlook released, raised its forecast for US gasoline demand for a second month in a row.
The EIA now predicting drivers will consume 9.1 million b/d this summer, given stronger economic indicators. That would put April-September 2021 demand 1.3 million b/d above summer 2020 levels but still more than 400,000 b/d below pre-pandemic levels seen in summer 2019.
NYMEX July RBOB settled 2.59 cents higher at $2.2190/gal, while July ULSD climbed 1.94 cents to $2.1350/gal.
The latest boost in the gasoline demand forecast comes as US states and cities relax pandemic restrictions and Americans show pent-up demand for travel.
"A global vaccination rollout is set to drive mobility sharply higher this summer, but OPEC's cautious plan to raise output should tighten the market with considerable deficits expected in the coming months," TD Securities analysts said in a note June 8.
EIA raised its outlook for 2021 crude oil prices by nearly $3/b from last month to $61.85/b for WTI and $65.19/b for Brent. However, it trimmed its 2022 average price forecast by 25 cents from last month to $56.74/b for WTI and $60.49/b for Brent.
OPEC+ oil output rises
Crude oil production from OPEC and its allies jumped 430,000 b/d in May, the latest S&P Global Platts survey found, led by Saudi Arabia, which accounted for about 84% of the monthly rise. But despite the production gains, the looser quotas meant OPEC+ compliance stayed mostly steady at 111.45%, compared to 111.16% in April, the survey found.
Oil futures had been lower overnight amid concerns of slowing Asia demand following a sharp fall in Chinese crude imports in May.
According to preliminary data from China's General Administration of Customs, the country's crude imports slumped 14.6% on the year to a five-month low of 9.69 million b/d in May. On the month, May imports were 1.8% lower than 9.86 million b/d in April.
But bearish sentiment arising from China's weaker May imports is likely to be short-lived, analysts said.
"With some improvement in the pandemic situation in India and the recovery in the US, China and Europe remaining on track, oil should remain a buy on dips," Jeffrey Halley, OANDA's senior market analyst, Asia Pacific said in a June 8 note.
On June 7, India's Prime Minister Narendra Modi announced the federal government will provide free coronavirus shots to all citizens above 18 years of age starting later this month, taking back control of the country's vaccination drive that has been marked by delays and shortages.
New Delhi and financial hub Mumbai started easing restrictions June 7 as COVID-19 infections in the country fell to a two-month low at 100,636 new infections, according to data from its health ministry.