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Travel demand ups ANS
US and China economic activity offsets oversupply and tariff concerns
Steve Sutherlin Petroleum News
Crude futures rose in early Asian trade July 17 as oil demand continued to be bolstered by a strong summer travel season and better than expected economic reports from the United States and China, counteracting fears of oversupply and trade disruptions.
Futures were little changed on July 16, with West Texas Intermediate and Brent both down some 0.2% at the close.
"Strong seasonal demand is currently providing upward momentum to oil prices, as summer travel and industrial activity peak," LSEG analysts said in a note quoted in a Reuters report.
The bulls were cheered by a surprise drawdown of U.S. commercial crude oil inventories.
Inventories for the week ended July 11 plunged 3.9 million barrels from the previous week to 422.2 million barrels -- 8% below the five-year average for the time of year, according to U.S. Energy Information Administration data released July 16.
Analysts answering a Wall Street Journal poll had expected inventories to remain steady, while a Reuters poll called for a 552,000-barrel drop.
Total motor gasoline inventories increased, however, by 3.4 million barrels for the period to 232.9 million barrels -- slightly above the five-year average for the time of year, the EIA said. Distillate fuel inventories increased by 4.2 million barrels on the week to 107.0 million barrels -- 21% below the five-year average for the time of year.
Chinese state-owned refiners are boosting production following scheduled maintenance in anticipation of rising third-quarter fuel demand and to rebuild diesel and gasoline stocks at multi-year lows, traders and analysts told Reuters.
"A potential peak in Chinese oil demand often comes up in conversations, but we think the concerns are likely overdone, as a closer look suggests demand is resilient," Barclays said in a note July 17.
Barclays estimated that Chinese oil demand in first half 2025 grew by 400,000 barrels per day year-on-year to 17.2 million bpd.
Alaska North Slope crude continued its run in the lower $70, slipping 27 cents July 15 to close at $72.42 per barrel, while WTI fell 46 cents to close at $66.52 and Brent fell 50 cents to close at $$68.71.
On July 14, ANS dropped $1.28 to close at $72.70, WTI plunged $1.47 to close at $66.98 and Brent dropped $1.15 to close at $ 69.21.
Prices improved July 11, seeing ANS leap by $1.69 to close at $73.97 as WTI leapt $1.88 to close at $68.45 and Brent leapt $1.72 to close at $70.36.
ANS plunged $1.33 July 10 to close at $72.28, as WTI plummeted $1.81 to close at $66.57 and Brent plunged $1.55 to close at $68.64.
ANS edged 2 cents lower July 9 to close at $73.61, WTI fell 5 cents to close at $68.38 and Brent fell 4 cents to close at $70.19.
ANS shed $1.17 over the trading week from its close of $73.59 July 8 to its close of $72.42 July 15.
On July 15, ANS closed at a $5.90 premium over WTI and at a $3.71 premium over Brent.
Massive upstream investment needed The world needs $18.2 trillion in oil and gas investment through 2050 to ensure energy supply by mid-century, OPEC Secretary General Haitham Al Ghais told Energy Connects in an interview published July 14.
Crude demand is forecast to continue upward through 2050, with consumption expected at 123 million then, up from 104 million bpd in 2025, according to OPEC's July World Oil Outlook.
Oil will account for 30% of the global energy mix in 2050, according to OPEC's estimates, which Al Ghais said are fact-based, not ideology based.
The forecast puts additional responsibility on OPEC's shoulders, and the group continues to advocate for increased investments in the energy sector, Al Ghais said.
"It's important that the world gets this right and invests now in order to be ready for the future," Al Ghais said.
Global economic development with growing demand for oil and an increasing global population and middle class are set to underpin demand growth in the coming decades, OPEC said, adding that there is no peak oil demand in sight and the world will see continued rising consumption for decades.
In the near term, the market seems to be taking in stride the larger-than-expected 548,000 bpd output hike announced July 5 by the Organization of the Petroleum Exporting Countries and allies.
Sheikh Nawaf Al-Sabah, chief executive officer of Kuwait Petroleum Corp., said July 9 in a Bloomberg TV interview that the market's in good shape. "We're seeing some potential tightness in the market, which gives us an opportunity to capture market share in the future," he said.
Signs of a tight market include crude stockpiles at the storage hub of Cushing, Oklahoma, at the lowest seasonally since 2014, and a collapse in U.S. diesel inventories, Bloomberg reported July 10.
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