The US oil benchmark rebounds after breaking a streak of 7 straight week gains

Oil futures rose on Tuesday as US traders pulled back from a three-day holiday weekend, with crude bouncing after recession fears eased last week.

US markets were closed on Monday for the June 16 holiday.

price action
  • West Texas Intermediate crude for July delivery CL.1,

    rose $1.33, or 1.2%, to $110.89 a barrel on the New York Mercantile Exchange. The most actively traded August contract CL00,

    rose $1.02, or 0.9%, to $115.15 a barrel. WTI tumbled over 9% last week, ending a streak of seven straight weekly gains.

  • August Brent Crude Oil BRN00,

    the global benchmark rose $1.15, or 1%, to $115.28 a barrel on ICE Futures Europe.

  • Back on Nymex, July Gasoline RBN22,
    rose 3.5% to $3.9247 a gallon during July heating oil HON22,
    up 3.2% to $4.4774 a gallon.

  • July natural gas futures NGN22,
    down 4.1% to $6.66 per million British thermal units.

What moves the market

Crude oil traded near three-month highs last week before retreating as rate hikes by the Federal Reserve and other central banks sparked concerns about the possibility of a recession and sparked a sharp sell-off in stocks and other assets.

However, stocks rallied on Tuesday, with US stock index futures pointing to strong gains on Wall Street.

Data on Monday showing that China significantly increased imports of Russian crude in May was positive for crude prices after the European Union decided to ban crude oil imports from the country by sea as the West eased sanctions in response further intensified on the Russian invasion of Ukraine.

Data showed that China imported a record 2.06 million barrels a day of Russian crude in May, about 18% of China’s total oil imports, Warren Patterson, head of commodity strategy at ING, said in a statement. That’s an increase of 1.33 million barrels per day, or 13% of total imports in May 2021.

“The big discounts on Russian crude were clearly too tempting for Chinese buyers. In theory, the more displaced Russian oil flows to China and India, the easier it should be for the world market to cope with the EU ban on Russian crude imports by sea,” Patterson wrote.

However, bearish analysts said signs of rising US crude production could signal further weakness for crude.

Data on Friday showed that the number of US oil rigs rose by 7 to 740 last week, while the Biden administration intends to start replenishing strategic reserves in September, “which looks like good news for producers who have a firm Buyers can get from the government. may save the price from an uncontrollable decline,” noted Alex Kuptsikevich, senior market analyst at FxPro.

“In the coming weeks, with negative surprises in the global economy and a stock market crash, we should be prepared for a correction to $100 or even $90. However, for the remainder of this year and most of next year, Brent crude could remain mostly in the $90-$120 range,” he wrote. The US oil benchmark rebounds after breaking a streak of 7 straight week gains

Brian Lowry

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