According to the most recent report, the price of crude oil increased by 3.2% on the global commodity market as US drilling activity decreased. The development, together with additional supply restrictions, contributed to the oil market’s rise for a second straight week.
Ahead of summer, demand surged despite rising energy costs, causing ICE Brent to rise by over 3.2%. But as the week came to a finish, the market shown some weakness, which continued into this morning’s early trade, according to a Monday note from an ING commodities strategist.
Notwithstanding this, ING analysts continue to be bullish on the oil market, predicting that a third-quarter deficit will tighten the oil balance.
According to the note, speculators have also become more constructive towards oil as market move into summer. Speculators increased their net long in ICE Brent by 68,535 lots to 140,221 lots last week.
Drilling activity in the US slowed further over the last week. The latest data from Baker Hughes shows that the number of active oil rigs fell by 3 last week to 485 – the lowest since January 2022.
The gas rig count remained stable over the week at 98. The ICE gasoil market has not reacted much to reports of further drone attacks on Russian refineries with 4 refineries targeted last week, according to commodities strategists at ING.
The gasoil crack continues to trade around $20/bbl. Russian middle distillate exports stand at around 4.32m tonnes so far in June according to LSEG data, which is the fourth consecutive month of increases in exports and the highest volume exported at least since the start of 2023.
European natural gas prices settled more than 1.5% lower last week as concern over Russian pipeline supplies eased. The EU’s latest sanction package against Russia also did not include a full ban on Russian LNG, instead only banning the re-export of Russian LNG from EU ports.
The move could see more Russian LNG remaining within Europe, ING said, adding that prices could come under more pressure today as Chevron resumed full production at its Wheatstone LNG facility in Australia over the weekend.
