IGI Logo

Increasing economic activity in the US is likely to boost oil demand further. The Transportation Security Administration announced Saturday that 2.03 million travelers were screened at airport security checkpoints on Friday. Also, The US Department of Transportation said vehicle miles traveled on U.S. highways in the seven days ending June 6 rose +4% w/w to 17.2 billion miles, the second straight w/w gain of at least 3%. 

Meanwhile, OPEC is optimistic that global crude demand will continue to recover after it forecast Thursday that global oil consumption will jump by about 5 million BPD (+5%) in the second half of this year, compared with the first half, as the world emerges from the pandemic. A positive demand outlook is likely to keep crude prices firm.

Weekly inventory report EIA showed that U.S. crude oil inventories as of Jun 4 were -4.0% below the seasonal 5-year average, gasoline inventories were -0.6% below the 5-year average, and distillate inventories were -4.9% below the 5-year average.

U.S. crude oil production in the week ended Jun 4 rose +1.9% w/w to 11.0 million BPD and was down by -2.1 million BPD (-16.0%) from the Feb-2020 record-high of 13.1 million BPD.

According to the CFTC Commitments of Traders report for the week ended June 8, net long for crude oil futures jumped by 19,202 contracts to 5,10,499 for the week. Speculative long position rose by 18,717 contracts, while shorts dropped by 485 contracts. 

As per Baker Hughes report that the number of oil and gas rigs in the US rose last week to 461 which have increased by 100 rigs this year. Active U.S. oil rigs in the week ended June 11 rose by +6 rigs to a 14-month high of 365 rigs, well above August's 15-year low of 172 rigs.

However, the upside is capped on the progress over US-Iran talks. Iran and the United States have made progress on virtually every issue under discussion in indirect meetings over the past two months. But as they began the sixth round of talks Saturday, the Biden administration remained unsure whether they are any closer to the final agreement than they were at the beginning. As long as the nuclear talks drag on, sanctions on Iranian crude oil exports will remain in place and keep Iranian crude off the global market which is supporting oil prices.