Crude oil futures extended its rally, while natural gas prices staged a fierce comeback to kick off the trading week. Energy commodities had come under pressure heading into the fresh trading week, but better-than-expected economic data supported the market.
August West Texas Intermediate (WTI) crude futures advanced $1.77, or 1.64%, to $109.39 per barrel at 18:45 GMT on Monday on the New York Mercantile Exchange. WTI prices are on track for a weekly loss of nearly 5%. Year-to-date, US crude is up about 45%.
Brent, the international benchmark for oil prices, topped $110. September Brent crude futures advanced $1.72, or 1.58%, to $110.82 a barrel on London’s ICE Futures exchange. Brent is also poised for June decline of about 6%, but it is still up more than 42% year-to-date.
Natural gas is looking to top $7 again following its intense selloff. August natural gas futures surged $0.292, or 4.69%, to $6.513 per million British thermal units (Btu). Natural gas plummeted 7% last week and is poised for a monthly collapse of approximately 25%.
The first factor for crude’s decent rally was the US economy. According to the Census Bureau, durable goods orders advanced 0.7% in May, topping the market forecast of 0.1%. However, pending home sales tumbled 13.6% year-over-year, while the Federal Reserve Bank of Dallas manufacturing index plummeted to -17.7 in June, falling short of the market forecast of 1.
The second factor is that the G7 is considering a cap on Russia crude oil to reduce Moscow’s energy revenues. This would be a part of a broader campaign of imposing new sanctions and raising tariffs on Russian products.
“While G-7 discussions focused on ‘capping’ the price of Russian oil offers up supply side support, demand destruction fear is escalating in the background,” analysts at Zaner wrote in a market update Monday.
Meanwhile, industry experts will be monitoring this week’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+. While the expectation is that the group will stick to its production hike, some are anticipating that the cartel could freeze output or even trim production levels.
In addition, investors are still waiting for the Energy Information Administration’s release of the weekly US petroleum supply report after the agency noted that the numbers would be delayed indefinitely due to a “voltage irregularity.”
In other energy markets, August gasoline futures fell $0.0591, or 1.56%, to $3.7226 per gallon. August heating oil futures dropped $0.127, or 2.99%, to $4.1178 a gallon.