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ANS stable over $85
Israel-Hezbollah tensions offset bearish surprise US inventory build
Steve Sutherlin Petroleum News
Alaska North Slope crude bolstered its position above the $85 mark June 26, tacking on 12 cents to close at $85.91. West Texas Intermediate added 7 cents to its margin above $80 with a close of $80.90 and Brent rose 24 cents to close at $85.25.
Prices firmed up despite a surprise jump in U.S. reserves according to Energy Information Administration data released June 26.
U.S. commercial crude inventories for the week ending June 21 -- excluding the Strategic Petroleum Reserve -- increased by 3.6 million barrels from the previous week to 460.7 million barrels, 2% below the five-year average for the time of year, the EIA said.
Analysts polled by Reuters had expected a 2.9 million barrel drawdown.
Total motor gasoline inventories jumped 2.7 million barrels for the period, reaching 233.9 million barrels, matching the five-year average for the time of year, the EIA said.
The Reuters poll predicted a 1 million barrel draw.
Distillate fuel inventories fell by 0.4 million barrels to 121.3 million barrels -- 9% below the five-year average for the season, the EIA said.
Middle East hostilities propped up prices as traders factored in the possibility of crude supply disruption from the region.
Israel and Lebanon's Hezbollah have escalated cross-border taunts of recent, raising the specter that an all-out Israel-Hezbollah war could draw in neighboring powers, including Iran.
Turkish President Tayyip Erdogan said Turkey stood with Lebanon, and he called for support from other regional players, Reuters reported June 26.
In early Asian trading June 27, WTI and Brent slipped on concerns that U.S. demand seemed weak in the midst of peak summer driving season but Brent recovered and was ahead by a penny as Petroleum News went to press.
The U.S. dollar hit a two-month high on June 25 -- making crude more expensive for holders of foreign currency -- putting additional pressure on prices.
Crude prices were further softened by profit-taking after potential supply disruptions in Russia and the Middle East drove strong gains through June, according to a June 26 Investing.com report.
On June 25, ANS fell 89 cents to close at $85.79, WTI fell 80 cents to close at $80.83 and Brent fell a dollar to close at $85.01.
ANS rose 96 cents June 24 to close at $86.68, while WTI rose 90 cents to close at $81.63 and Brent rose 77 cents to close at $86.01.
Prices slid June 21, taking ANS down 67 cents to close at $85.71, as WTI plunged $1.44 to close at $80.73 and Brent edged 47 cents lower to close at $85.24.
ANS slipped 23 cents June 20 to close at $86.39, but WTI gained 60 cents to close at $82.17 and Brent rose 38 cents to close at $85.71.
On June 26, ANS closed with a $5.01 premium over WTI, and with a 66-cent premium over Brent.
The ANS closing price of $85.91 on June 26 was 71 cents lower than its closing price of $86.62 on June 18.
Air transportation hitting highs While traders were underwhelmed by summer driving gasoline demand, Jet fuel is set to be an overperformer.
The Transportation Security Administration said it expects to screen more than 32 million individuals from June 27 through July 8, a 5.4% increase over 2023 Independence Day holiday travel volumes.
On June 23, TSA shattered the record for most people screened on a single day, screening 2.99 million individuals, it said in a June 24 release.
TSA said it anticipates the peak travel day will be Friday, June 28, when the agency expects to screen more than 3 million. Seven of the top 10 busiest travel days ever have occurred over the past month.
"We expect this summer to be our busiest ever and summer travel usually peaks over the Independence Day holiday," said TSA Administrator David Pekoske. "The traveling public is on the move, which is a sign of a healthy economy."
Analyst sees WTI in $80s through end of 2025 WTI will trade in the $80-$85 range for the rest of 2024 and 2025, according to Ben Cook, energy analyst and manager of the Hennessy Energy Transition Fund.
"Most energy producers do pretty well with those prices," Cook told MarketWatch for a June 24 article.
Cook said he expects demand for crude to remain favorable in part because of continued economic strength.
On the supply side, Cook expects U.S. production growth will remain muted, and that the Organization of the Petroleum Exporting Countries will continue to restrain production to support oil prices.
A year ago, many investors assumed renewables would rapidly curtail oil and natural gas consumption, but artificial intelligence has destroyed that theory, given the copious quantities of electricity required to power server farms, he said.
"Now there is recognition that the growth rate in electricity demand will necessitate expansion in all forms of energy," Cook said.
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