Crude oil futures settled higher on July 15, as recession fears eased after a new round of US data painted a still-robust picture of the economy.
NYMEX WTI settled $1.81 higher at $97.59/b in August, while ICE September Brent rose $2.06 to $101.16/b.
“Crude prices rose after an impressive retail sales report reminded us just how strong the US economy remains,” said OANDA senior market analyst Ed Moya in a note.
“The oil market was down earlier this week on demand destruction fears, so today’s retail sales report and University of Michigan consumer sentiment data helped undo some of that.”
Retail sales in the United States increased by 1% in June, according to Commerce Department data released on July 15, exceeding market expectations and easing fears of an impending recession, which have weighed heavily on crude in recent sessions.
August RBOB settled up 2.64 cents to $3.2132/gal on the NYMEX, while August ULSD gained 4.96 cents to $3.6990/gal.
Analysts said the market moved higher as recession fears faded, focusing on tight global supply.
“Despite the soft price action in crude oil, the term structure screams of tightening markets,” a TD Securities analyst said in a note. “Energy supply risks continue to rise, with Biden in Jeddah set to leave the Middle East this week, and reports that no public announcement on increasing oil supply will be made.”
The spread between front-month and year-ahead ICE Brent contracts has increased by nearly $2/b since July 13, closing the week at $15.82/b.
On July 15, US President Joe Biden met with Saudi King Salman and Crown Prince Mohammed bin Salman in Riyadh, and on July 16, Biden is expected to attend the Gulf Cooperation Council summit and meet with the leaders of the UAE, Iraq, and Egypt.
However, the US does not expect to secure an oil supply commitment during President Joe Biden’s visit to Saudi Arabia, but he will press the kingdom to act through OPEC+ in the coming weeks, according to National Security Advisor Jake Sullivan on July 15.
All eyes in the market will now be on the next OPEC+ meeting, scheduled for Aug. 3, when ministers will formally set September production levels.
According to Sullivan, the White House is “hopeful that we will see additional actions by OPEC+ in the coming weeks.”
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Meanwhile, Europe could face energy rationing this winter, according to Shell CEO Ben van Beurden, who spoke late July 14 at Aurora Energy’s spring forum in Oxford.
“Ignoring [Russian President Vladimir Putin’s] threats would be unwise.” “He is capable and willing to weaponize energy,” van Beurden said.
State-controlled Gazprom reduced Nord Stream pipeline flows to Germany to 40% capacity in mid-June, citing turbine maintenance issues at the Portovaya compressor station.
The pipeline is also undergoing annual maintenance, with flows reduced to zero, and there are concerns that the link may not reopen after the work.
