Oil futures rose Monday, finding support on tight supplies of gasoline and diesel that have driven motor-fuel prices to all-time highs as the summer U.S. driving season looms.
Price action
- West Texas Intermediate crude for July delivery CL.1, +0.83% CL00, +0.83% CLN22, +0.83% rose $1.06, or 1%, to $111.34 a barrel on the New York Mercantile Exchange.
- July Brent crude BRN00, +0.95% BRNN22, +0.95%, the global benchmark, was up $1.21, or 1.1%, at $113.76 a barre on ICE Futures Europe.
- June gasoline RBM22, +0.03% edged p 0.2% to $3.844 a gallon, after ending at a record above $4 a gallon early last week. June heating oil HOM22, +0.35% was up 0.5% at $3.64 a gallon.
- June natural-gas futures NGM22, -2.33% fell 1.3% to $7.98 per million British thermal units.
Market drivers
“Oil prices are supported as gasoline markets remain tight amid solid demand heading into the peak U.S. driving season. Refineries are typically in ramp-up mode to feed U.S. drivers unquenching thirst at the pump,” said Stephen Innes, managing partner at SPI Asset Management, in a note.
The Energy Information Administration last week reported that total U.S. motor gasoline inventories decreased by 4.8 million barrels in the week ended May 13 and stood around 8% below the five-year average for this time of year. Distillate fuel inventories increased by 1.2 million barrels in the week ended May 13, but remained about 22% below the five year average.
Prices for gasoline at the pump are at a record, while prices for diesel, crucial for transporting goods, have also hit all-time highs.
Crude has also been underpinned as China moves toward easing lockdown measures in Shanghai, analysts said. Traders, however, were also watching reports of surging COVID cases in Beijing. where officials extended an order for students and workers to stay home and will carry out more mass testing in the nation’s capital.
Meanwhile, news reports that U.S. President Joe Biden and that Saudi Arabia’s crown prince, Mohammed bin Salman, were working toward a meeting could put a lid on crude’s upside, Innes said. Saudi Arabia has so far resisted U.S. calls for the Organization of the Petroleum Exporting Countries and its allies to more aggressively boost output in response to tightening crude supplies.