Oil futures finished higher for a third straight gain Thursday, boosted by optimism over the summer demand outlook, despite surging COVID cases in India.
“Amid a surge of new COVID-19 cases, demand out of India remains a pressing concern, with clear signs that consumption is already stumbling in the world’s third-largest crude importer,” said Robbie Fraser, global research & analytics manager at Schneider Electric.
“However, recent economic data out of the U.S. continues to point to a strong recovery, along with increased travel across most major economies,” he said in a daily note.
The U.S. economy charged ahead in the first, three months of the year, with gross domestic product, the official scorecard for the U.S. economy, rising at a 6.4% annual pace in the first quarter, the government said Thursday. U.S. weekly jobless benefit claims, meanwhile, declined last week to 553,000 from a revised 566,000 a week earlier.
West Texas Intermediate crude for June delivery
rose $1.15, or 1.8%, to settle at $65.01 a barrel on the New York Mercantile Exchange. That was the highest front-month contract settlement since March 15, according to Dow Jones Market Data.
the most actively traded contract, rose $1.27, or 1.9%, to $68.05 a barrel.
Data from the Energy Information Administration released Wednesday showed a 90,000 barrel rise in U.S. crude inventories, due largely to imports, while refiners increased throughput and demand for refined products increased, Warren Patterson, head of commodities strategy at ING, wrote in a note.
The analyst sounded a note of caution, however.
“While demand appears to be trending in the right direction in the U.S., there are still clear concerns over the impact that the surge in COVID-19 cases in India is having on fuel demand,” he said. “There is growing interest from Indian refiners to increase refined product exports, with a number of them offering product to the export market in a bid to tackle building domestic inventories.”
The EIA report on Wednesday also showed strong implied U.S. motor gasoline demand, which climbed by 67.5% over the past four weeks ended April 23, from the same period a year ago.
Natural-gas futures settled lower after the EIA on Thursday reported that domestic supplies of natural gas rose by 15 billion cubic feet for the week ended April 23. On average, analysts forecast an increase of 9 billion cubic feet, according to a poll conducted by S&P Global Platts.
June natural gas
fell 1.7% to $2.91 per million British thermal units.
Meanwhile, in related oil news, the Associated Press reported that the Biden administration is considering a near wholesale rollback of some of the Trump-era sanctions imposed on Iran in a bid to get Tehran to return to compliance with a landmark 2015 nuclear accord.
Easing sanctions may allow Iran to pump more oil into the world markets, which was expected to be one of the key concerns for members of the Organization of the Petroleum Exporting Countries and the group’s allies, together known as OPEC+, when they met this week. However, the group of producers decided to keep their plan to gradually raise output from May through July.