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ANS has positive week
Crude rides AI optimism for economy; bullish summer travel expectations
Steve Sutherlin Petroleum News
Alaska North Slope crude -- despite a general risk-off chill in financial markets -- vaulted $2.01 over the trading week from Wednesday to Wednesday, from its close of $84.35 May 22 to a close of $86.36 May 29 -- a loss of 70 cents on the day.
West Texas Intermediate gained $1.72 the same week, from $77.57 May 22 to $79.23 May 29. It was down 60 cents on the day.
Brent was the laggard, up $1.70 on the week to close at $83.60 versus $81.90 May 22: down 62 cents for the day.
A rebounding dollar put pressure on crude prices May 29 after the reversal of a May 28 slide in the greenback which intensified robust crude price appreciation.
In a week that belonged to the bad news bears, May 28 was the day that made the favorable weekly price report possible.
ANS catapulted $2.38 May 28 to close at $87.06, eclipsing its weekly increase by 37 cents.
WTI leapt $2.11 on the day to close at $79.83 while Brent leapt $2.10 to close at $84.22.
U.S. equities caught an updraft May 28 built around excitement over artificial intelligence stocks stoked by an announcement that Tesla founder Elon Musk had formed a multibillion-dollar investment group to build massive AI data centers using advanced microchips from market darling Nvidia.
The tech-heavy Nasdaq Composite notched a new high May 28, exceeding 17,000 for the first time, and Nvidia extended a post-earnings rally to breach a record $1,140 a share, taking other AI stocks along on the rising tide.
U.S. crude markets were closed May 27 for Memorial Day, but the oil rally evidenced on May 28 had its roots in May 27 foreign trading that took Brent futures above $83 per barrel while WTI cleared $78.
US summer travel season looks bullish for oil The U.S. summer driving season kicks off after the Memorial Day weekend. It is a reliable indicator of summer gasoline demand that is watched closely by crude oil traders. The American Automobile Association forecasted a record 38.4 million drivers hitting the road for the long holiday weekend.
"Since the pandemic, the summer driving season has not seen a surge in demand, which can push pump prices higher, so it will be interesting to see if this year bucks that trend," Andrew Gross, AAA spokesperson said in a May 23 release. "This week's move by the Biden Administration to sell off the million barrel Northeast Gasoline Supply Reserve might help stave off any regional pump price surges, but likely won't move the national average that much."
"We saw a very strong demand from the U.S. last week ahead of the Memorial Day long weekend, Giovanni Staunovo, UBS Group AG commodity strategist, was quoted in a May 27 Bloomberg article. "Record flight activity and strong gasoline demand should give some support to oil prices."
Crude traders also look to airline passenger numbers over Memorial Day weekend to gain intelligence for predicting summer travel and its effect on jet fuel demand. The AAA predicted that the number of people flying over the weekend will be the highest in 20 years.
Passenger numbers from the Transportation Security Administration bore out the bullish expectations.
The TSA processed 2,771,151 passengers through its checkpoints nationwide on May 24, the big-travel Friday eve of the holiday weekend. The corresponding passenger count in 2023 was 2,596,978.
On Memorial Day, May 27, the TSA saw 2,951,163 passengers through its scanners, up from 2,744,590 on May 27, 2023.
Moreover, the holiday weekend surge had wide shoulders, with large numbers of travelers getting an early start on vacation travel.
"May 23 proved to be a very high number nationwide as 2,897,417 individuals were screened at airports across the country, which was the second highest number of people screened in a single day in TSA's 22-year history," the TSA said in a May 24 release.
Crude prices May 27 were further supported by "concern that Israel's war in Gaza may expand to the broader region, threatening oil supplies, after an Egyptian soldier was killed in a clash with Israeli forces at the Rafah border crossing," Bloomberg reported May 27.
The Organization of the Petroleum Exporting Countries and its allied producing nations will meet virtually June 2 to discuss production levels. The group is widely expected to hold steady at its current production targets.
ANS and Brent each rose 76 cents May 24 to close at $84.75 and $82.12 respectively while WTI rose 85 cents to close at $77.72.
On May 23, ANS shed 36 cents to close at $83.99, WTI lost 70 cents to close at $76.87 and Brent fell 54 cents to close at $81.36.
On May 29, ANS sported a $7.13 differential over WTI and a $2.76 differential over Brent.
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