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May 27, 2022, 4:17 p.m. EDT

U.S. oil benchmark closes at 11-week high with summer driving season set to get under way

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By Joseph Adinolfi

Oil futures ended higher Friday to cap a week of strong price action, with the U.S. benchmark posting its highest finish in more than 11 weeks with summer driving season set to begin over Memorial Day weekend.

Price action

  • West Texas Intermediate crude for July delivery /zigman2/quotes/211629951/delayed CL.1 +0.77% /zigman2/quotes/209723049/delayed CL00 +0.77% rose 98 cents, or 0.9%, to close at $115.17 a barrel on the New York Mercantile Exchange, the highest close for a front-month contract since March 11, according to Dow Jones Market Data. The U.S. benchmark rose for a fifth consecutive week, advancing 4.3%.

  • July Brent crude , the global benchmark, rose $2.03, or 1.7%, to finish at $119.43 a barrel on ICE Futures Europe, its highest front-month close since March 25.

  • Back on Nymex, June gasoline rose 3.6% to $4.0158 a gallon, while June heating oil rose 0.9% to $4.003 a gallon.

  • July natural gas fell 1.9% to end at $8.727 per million British thermal units.

Market drivers

A team of commodities analysts from Commerzbank recently raised their oil-price forecast for each of the next three quarters due to the growing likelihood that the EU will agree on an oil embargo on Russian oil.

This will increase demand for non-Russian oil, which should support prices for WTI and Brent.

However, they believe the oil market would see the balance between supply and demand reach an equilibrium during the second half of the year despite lingering supply risks, which is why the team expects oil prices to slide back below $100 per barrel during the second half of 2022.

After being squeezed higher to start the year, the oil market has calmed down noticeably in past weeks. In early March, shortly after Russia’s invasion of Ukraine, the price of Brent oil had risen to almost $140 a barrel, marking a 13½-year high.

Natural gas prices retreated on Friday after touching their highest level since 2008 earlier this week, following the release of Energy Information Administration inventories data which showed a sharp contraction in stockpiles.

As the U.S. Memorial Day Weekend marks the start of the summer driving season, the next near-term catalyst for energy markets is expected to arrive next week when oil ministers who are members of the Organization of the Petroleum Exporting Countries, as well as representatives of countries like Russia which have more recently aligned themselves with OPEC, will hold a virtual meeting to discuss production plans.

US : U.S.: Nymex
$ 73.09
+0.56 +0.77%
Volume: 59,081
June 8, 2023 7:02a
US : U.S.: Nymex
$ 73.09
+0.56 +0.77%
Volume: 59,081
June 8, 2023 7:02a

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