Oil drifted lower on Friday morning in Asia but was expected to post solid gains moving forward. While oil demand is growing, vaccinations are also rising. The rise in inoculations likely fuelled the U.S economic growth and it is dampening the impact of a global resurgence in COVID-19 cases involving the Delta variant.
Due to tight crude supplies and strong fuel demand in the U.S, Brent and WTI futures for the week were set for around a 2% gain. The American Petroleum Institute (API) and the U.S. Energy Information Administration (EIA) reported a draw in U.S. crude oil supplies. The report also showed crude stocks at Cushing were at their lowest since January last year.
On Thursday, Brent oil futures were up 1.75% then edged down 0.79% to $74.51 by 1:18 AM ET (5:18 AM GMT), while WTI futures were down 0.736 to $73.06, reducing a previous 1.7% rise.
Moreover, ANZ analysts have said that even U.S. jet fuel consumption hit its highest level since March 2020.
Also, in India, the rebound in gasoline consumption and industrial production has accelerated after a surge in COVID-19 cases in the country earlier this year.
Westpac senior economist Justin Smirk said that they’ve got stronger prices for a bit longer now, because it’s a fundamental supply-demand issue in terms of the recovery in demand they’re seeing in places like the U.S.
About the rising COVID-19 cases, Smirk said he thinks the risks of the large shutdowns they saw in 2020 are much lower.
The OPEC Plus (OPEC+)
Beginning in August, the Organization of the Petroleum Exporting Countries and allies (OPEC+) will start hiking monthly supplies by 400,000 barrels a day. This will go on until all OPEC+ production stops.
As demand increases through the second half of 2021, it is expected that the market will be able to absorb these additional barrels.
Meanwhile, in metal commodities, gold and silver prices were up after the US Federal Reserve monetary policy meeting. Prices for copper, iron ore, platinum group metals soared. Grain futures were higher on early Thursday trading on the Chicago Board of Trade.
The dollar index was weak on Thursday, but the currency gained ground after yesterday’s sell-off.