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Crude futures settle higher and add gains on U.S. policy

Commodities Aug 11, 2021 05:23PM ET
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© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo
 
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By Jessica Resnick-Ault

NEW YORK (Reuters) -Oil futures settled higher on Wednesday, changing course after the Biden administration said it would not call on U.S. producers to increase crude output, and that efforts to increase OPEC production were a longer-range plan.

The market was also bolstered by a government report showing U.S. crude supplies fell last week, shifting the spotlight away from production by the Organization of the Petroleum Exporting Countries.

Brent crude is up about 35% this year, supported by OPEC-led supply curbs, even after the global benchmark oil contract last week suffered the steepest weekly loss in four months on worries that travel restrictions to curb coronavirus infections would hit demand.

Brent settled up 81 cents, or 1.15%, at $71.44 a barrel, and continued to tick upward in thin volumes during post-settlement trade. The increase followed a 2.3% rally on Tuesday. Earlier in the session it dipped to a low of $69.07 a barrel.

U.S. West Texas Intermediate (WTI) settled up 96 cents, or 1.41%, at $69.25 a barrel, after a 2.7% jump on Tuesday.

Prices fell early in the session after the White House said in a statement that the Biden administration had urged OPEC and its partners to boost production.

The market reversed course after the White House later said its outreach to OPEC members and its oil-producing allies is ongoing and aimed at long-term engagement, not necessarily an immediate response.

The administration added it had not called upon U.S. producers to ramp up production, which led the market to turn higher, said Phil Flynn, a senior analyst at Price Futures Group in Chicago.

OPEC+, consisting of the cartel and allies including Russia, agreed in July to boost output each month by 400,000 barrels per day over the previous month, starting in August, until the rest of their output cuts are phased out.

The producers have been gradually easing a record cut of 10 million bpd, about 10% of world demand, made in 2020 as oil use recovers from the pandemic-induced slump.

The Energy Information Administration (EIA) said on Tuesday that U.S. job growth and increasing mobility had boosted gasoline consumption so far this year. [EIA/M]

On Wednesday, EIA data showed crude oil stockpiles fell last week, while gasoline inventories dipped to their lowest level since November. Overall, crude inventories have been on the decline for several weeks due to increased demand. [EIA/S]

U.S. fuel consumption, as measured by product supplied, fell in the most recent week, but over the last four weeks, sits at 20.6 million bpd, roughly in line with 2019 levels.

Analysts said if fuel demand starts to decline as a result of the Delta variant of the coronavirus, it would be negative for energy prices.

"We did see a fairly decent setback in overall product demand. That's the point in today's report that could cause the most concern considering the backdrop of the Delta variant and overall uncertainty," said Tony Headrick, energy market analyst at CHS Hedging.

Crude futures settle higher and add gains on U.S. policy
 

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Comments (16)
Jordan Ravine
Jordan Ravine Aug 11, 2021 6:30PM ET
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I hate Trump but i hate this too
Scott Bailey
Scott Bailey Aug 11, 2021 3:53PM ET
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The world has to be laughing at the USA! You could’nt make this stuff up, purely incompetent
Zach Twist
Zach Twist Aug 11, 2021 1:50PM ET
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450mm bo in storage and could lease federal lands to provide financial aid stemming from covid. Who put jake sullivan in charge?
Alan Rice
Alan Rice Aug 11, 2021 12:32PM ET
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US Leadership: Confused.
Alan Rice
Alan Rice Aug 11, 2021 12:31PM ET
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Crude Target: $400/bbl.
Wankel YU
Wankel YU Aug 11, 2021 10:41AM ET
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Putin will pump more to 100+🍺🍺🍺
eduff duff
eduff duff Aug 11, 2021 9:49AM ET
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No impact at all. Bullish trend neverend
Franco Dominguez
Franco Dominguez Aug 11, 2021 9:49AM ET
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is a lie bullish, why they dnt tell that vaccine didnt work, why they are not posting the deade rate at hospitals like the pandemic
Shane Weddle
Shane Weddle Aug 11, 2021 9:49AM ET
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Franco Dominguez because no one in the media wants to make the new administration look bad. All the dearh coints last year were targeted at 45.
Franco Dominguez
Franco Dominguez Aug 11, 2021 9:27AM ET
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OPEC is autonomous dnt be pressed by external countries, the delta variant is rising so better option is to cut more barrels
Steffen vdm
Steffen vdm Aug 11, 2021 8:33AM ET
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flooding the market with money and oil: what a great strategy to cover up problems and keep the rich happy
JonMichael Patrick
JonMichael Patrick Aug 11, 2021 8:33AM ET
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bro we are in the process of the greatest wealth transfer of all time...
IceIce Baby
IceIceBaby Aug 11, 2021 8:33AM ET
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JonMichael Patrick  :D Yeah, like always.
Kelly Mayer
Kelly Mayer Aug 11, 2021 8:32AM ET
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Wait just a while untill the Covid propaganda ends. Climate change fanaticism in the oven. get ready for climate change fearmongering on your local MSM channel, with possible lockdowns in the mix. good bye oil.
 
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