This week we reached the peak of the driving season in America and the demand for oil increased. The American Automobile Association forecast that holiday travel this July 4 weekend will be 5.2% higher than last year’s, suggesting stronger oil demand. Car travel, per the AAA, would be 4.8% higher than last year.
Crude oil inventories in the United States fell by 9.163 million barrels for the week ending June 28, according to The American Petroleum Institute (API), after analysts had expected a 150,000 barrel draw. For the week prior, the API reported a 914,000 barrel build in crude inventories.
Hurricane Beryl, a Category 2 storm, made landfall in Mexico, after killing least 11 people in the Caribbean, tearing through buildings and power lines across several Caribbean islands. Oil projects in U.S. waters to the north may be disrupted if the hurricane continues on its expected path. The fear of a more active than usual hurricane season could continue supporting prices in the coming weeks.
Meanwhile,The possibility that U.S. interest rate cuts are approaching, raised expectations for an increase in oil demand. U.S. job growth slowed marginally in June, but a rise in the unemployment rate to a more than 2.5-year high of 4.1%, along with moderated wage gains, indicated easing labor market conditions. This development could prompt consideration of a rate cut at the July meeting. Lower interest rates can boost economic activity and increase crude oil demand.
There have been reports that Russian majors Lukoil and Rosneft would sharply reduce exports of crude this month after the end of refinery maintenance season. Reuters cited as saying that the combined loadings of the two companies at the Black Sea port of Novorosiisk in July are set to be 220,000 bpd lower than they were in June.
Although the differences between the parties remain, it was reported that the ceasefire negotiations between Israel and Hamas will resume from next week. An easing of the Middle Eastern conflict reduces the risk premium of barrels out of the region and weighs on oil prices.
Masoud Pezeshkian, the reformist candidate, won the early presidential election in Iran. His victory could resolve the nuclear issue and reduce tensions with the West.
The price of gold per ounce grew by 1.51% to $2,392.16, reaching its highest level in a month. The latest U.S. employment data has increased the likelihood of a Federal Reserve interest rate cut in September.