|Bitumen Africa|

Thursday, 11 July, 2024   12:00 AM

Oilrallied to settle above $82 a barrel as a government report showed signs of strengthening demand for refined products after the Fourth of July holiday, outweighing uncertainty over the timing of Federal Reserve rate cuts.

The US Independence Day holiday provided an expected bump in demand for jet fuel, with the four-week seasonal average rising to the highest since 2019, according to EIA data released Wednesday.

Meanwhile, US gasoline demand on a four-week average also improved to the highest since 2021 seasonally, and inventories of the motor fuel fell to the lowest since May.

“This summer was expected to be a pretty good driving season, and it seems to be playing out that way,” said Brian Kessens, a managing director at Tortoise Capital Advisors Llc.

Adding to bullish sentiment, inventories at the Cushing storage hub, the delivery point for West Texas Intermediate futures, fell to the lowest level since late April.

That helped strengthen WTI’s prompt spread to $1.02 in backwardation from 85 cents on Tuesday.

Oil is up about 17% this year, with gains supported by OPEC+ supply cuts, as well as expectations for looser US monetary policy.

Fed Chair Jerome Powell said on Tuesday that while he was watching for signs of labor market weakness, policymakers still wanted to see more evidence that inflation was slowing before reducing borrowing costs.

Meanwhile in China, the world’s largest oil importer, data on Wednesday underscored the nation’s economic challenges, with deflationary pressures persisting as factory-gate prices fell.

That followed a spate of signals that suggest diminished appetite for crude from some of the nation’s refiners.

Crude’s recent listless trading has seen gauges of volatility decline. Brent’s implied volatility — a forecast of likely movement in oil futures that’s tied to options pricing — is near the lowest level in about six years.

Price:

• WTI  for August delivery rose 0.8% to settle at $82.10 a barrel in New York.
• Brent for September settlement advanced 0.5% to $85.08 a barrel.