Oil futures traded higher Tuesday, led by gains for gasoline ahead of the start of the U.S. summer driving season at the end of the month.
Traders also noted remarks by Saudi Arabia’s energy minister, who warned short sellers that pain may lie ahead, as ministers from OPEC+ — made up of the Organization of the Petroleum Exporting Countries and its allies — prepared to meet in June.
Price action
-
West Texas Intermediate crude for July delivery
CL.1,
+1.03% CLN23,
+1.03%
rose 67 cents, or 0.9%, to $72.72 a barrel on the New York Mercantile Exchange. -
July Brent crude
BRN00,
+0.88% BRNN23,
+0.88% ,
the global benchmark, gained 72 cents, or 0.9%. to trade at $76.71 a barrel on ICE Futures Europe. -
Back on Nymex, June gasoline
RBM23,
+1.18%
jumped 1.3% to $2.685 a gallon, while June heating oil
HOM23,
+0.66%
was up 0.5% at $2.378 a gallon. -
June natural gas
NGM23,
-1.88%
declined 1% to $2.375 per million British thermal units after kicking off the week with a 7% tumble on Monday.
Market drivers
Analysts said optimism over a pickup in demand for gasoline ahead of the U.S. Memorial Day holiday weekend was contributing to support.
See: Here’s what might lead to a spike in gasoline prices this summer
Gasoline rallied Monday as speculators looked for a demand boost as the Memorial Day holiday approaches, said Robert Yawger, executive director for energy futures at Mizuho, in a note.
U.S. gasoline storage of 218.3 million barrels, as reported by the Energy Information Administration, is 12.6 million below the nine-year low of 205.7 million barrels from Nov. 4, 2022, “implying to me that a storage situation will likely develop at some point in the relatively near term future,” he said, in a note.
The July gasoline crack spread was up 3.25% versus $34.29 and traded to a July contract high of $34.33 earlier in the session, he wrote. The crack spread is the difference between the price of a barrel of crude and the products that can be refined from it
Meanwhile, speaking at an economic forum in Doha, Saudi energy minister Prince Abdulaziz bin Salman on Tuesday warned short sellers could face another round of pain.
“Speculators, like in any market they are there to stay, I keep advising them that they will be ouching, they did ouch in April. I don’t have to show my cards, I’m not a poker player…but I would just tell them to watch out,” he said, according to Reuters.
Saudi Arabia and its OPEC+ allies unexpectedly announced more than 1 million barrels in additional cuts in early April, sparking a spike higher in crude prices, though gains were washed away by the end of the month. The cuts took effect at the beginning of May.
A meeting of OPEC+ ministers is expected June 4 in Vienna.
