Due to intensified geopolitical risks in the Middle East and Europe, the market is concerned about global crude oil supply disruptions, while unexpected increases in US crude oil and gasoline inventories have put upward pressure on prices, and crude oil futures closed higher on Thursday. #Crude Oil Closing#
WTI August crude oil futures closed up $0.84/barrel, or 1.04%, at $81.74/barrel on Thursday (June 27), a rise of 1.24% to $81.91/barrel. Earlier in the day, WTI futures rose over $1/barrel.
(West Texas Intermediate (WTI) crude oil futures chart, source: FX168)
Brent crude oil futures settlement price closed up $1.14/barrel, or 1.34%, at $86.39/barrel on Thursday (June 27), up 1.05% to $85.36/barrel, as of publication.
(Brent crude oil futures chart, source: FX168)
[Market News Analysis]
The cross-border tension between Israel and Lebanon continues to escalate, and people are concerned that the war may expand to involve other countries including major oil-producing country Iran.
The French Foreign Ministry stated that France is extremely concerned about the situation in Lebanon and called on all parties to exercise restraint.
Ashley Kelty, an analyst at Panmure Gordon, said that any situation could have a significant impact on crude oil supplies in the Middle East.
The Kremlin stated that Russia is considering reducing its relations with the West, but has not yet made a decision.
Reducing the level of relations between the two countries or even severing relations will highlight the severity of the confrontation between Russia and the West on the issue of Ukraine in recent months.
The US Energy Information Administration (EIA) reported that crude oil inventories increased by 3.6 million barrels this week. Analysts surveyed by Reuters had previously expected inventories to decrease by 2.9 million barrels.
"Yesterday's EIA report is still a suspense for today's market, because we have seen unexpected increases in production and refinery operating rates," said John Kilduff, a partner at Again Capital.
US gasoline inventories increased by 2.7 million barrels. Analysts had previously expected inventories to decrease by 1 million barrels.
"We are currently in the peak season of summer driving and are about to usher in the July 4th weekend. Therefore, if the market is in a sideways consolidation state now, the market may even go down after the holiday weekend," said Tim Snyder, an economist at Matador Economics.
Data from Dutch consulting firm Insights Global showed that in Europe, independent gasoline inventories at the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage center increased by more than 9% for the week ending Thursday, indicating limited demand for US gasoline across the Atlantic.
Meanwhile, Atlanta Fed President Bostic reiterated his expectation for a rate cut in the fourth quarter of this year in a policy article released on Thursday, which is consistent with investors' expectations of a rate cut starting in September. Investors are concerned that the Federal Reserve's long-standing restrictive interest rate framework has exacerbated the household crisis and led to poor demand prospects.
"There is really nothing for us to expect for the Fed's attempt to stimulate the market again," said Kilduff of Again Capital.
In the future, investors will focus on the US core personal consumption expenditures (PCE) data for May, which will provide clues as to when to start the rate cut cycle. Core PCE inflation data is the Fed's favored inflation indicator and weak demand and increased inventories are putting pressure on prices. "The systemic flow of WTI has weakened, but if the price can remain above $85.99/barrel, Brent crude oil may still see funds seeking to increase their highest historical positions by 7%." "On the other hand, demand statistics are weak and gasoline inventories have increased significantly, contrary to the typical seasonal pattern of the summer driving season, prompting commodity trading advisers (CTAs) to sell a large amount of RBOB gasoline."
US core PCE inflation data is expected to increase by 0.1% month-on-month, lower than April's 0.2%. The base inflation rate is expected to slow from 2.8% the previous month to 2.6%.
TDS analysts pointed out that despite the unexpected increase in crude oil inventories reported by the US Department of Energy (DOE), the oil market remains stable, and weak demand and increased inventories are putting pressure on prices. "The systemic flow of WTI has weakened, but if the price can remain above $85.99/barrel, Brent crude oil may still see funds seeking to increase their highest historical positions by 7%." "On the other hand, demand statistics are weak and gasoline inventories have increased significantly, contrary to the typical seasonal pattern of the summer driving season, prompting commodity trading advisers (CTAs) to sell a large amount of RBOB gasoline."