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Providing coverage of Alaska and northern Canada's oil and gas industry
June 2021

Vol. 26, No.24 Week of June 13, 2021

WTI closes above $70

ANS, Brent hold $70 in June; low summer fuel demand moderates prices

Steve Sutherlin

Petroleum News

Alaska North Slope crude dropped 15 cents to close at $72.08 per barrel June 9, Brent was unchanged at $72.22 and West Texas Intermediate slipped 9 cents to $69.96.

WTI briefly joined the $70+ club June 8, rising 82 cents to close at $70.05, its first close over $70 since October 2018. ANS was up 69 cents to $72.23 and Brent gained 73 cents to close at $72.22. June - ANS on June 2 and Brent on June 1. WTI reached the $70.05 level again in early trading at Petroleum News press time June 10.

The price strength has been bolstered by recoveries in demand in the United States, China and Europe, and on hopes that the spike in COVID-19 cases in Asia is abating.

Passenger jet fuel has been a laggard in transportation fuel demand since the pandemic began, but domestic travel continues to increase. The number of passengers passing TSA checkpoints in the United States reached 1,984,658 on June 6, versus 441,255 passengers

The $70s may represent the new normal trading range for the oil benchmarks in coming weeks.

Despite fluctuations, ANS and Brent have held on to the lower $70s trading range since entrances at the beginning of

on the corresponding day in 2020, and 2,669,860 passengers on the day in 2019.

The TSA checkpoints saw 1,900,170 passengers on Memorial Day.

The U.S. State Department is lifting some restrictions on international travel, raising hopes of a recovery in foreign travel demand during the second half of 2021.

On the other hand, prices may be held in check by other factors.

While there was a 5 million-barrel draw on crude oil stocks on the week to June 4, stocks of gasoline and other fuels jumped on weak demand, according to Energy Information Administration data for the week that included Memorial Day weekend. Producers supplied 17.7 million barrels per day, versus 19.1 million in the previous week.

Traders are watching negotiations on the Iran nuclear deal between the United States and Iran which may lead to a lifting of sanctions against Iran, which would lead to the release of up to 1 million bpd of crude to the market.

However, U.S. Secretary of State Antony Blinken said he expects that even if Iran and the United States reconstruct the nuclear deal, many U.S. sanctions on Iran would remain.

“I would anticipate that even in the event of a return to compliance with the JCPOA, hundreds of sanctions will remain in place, including sanctions imposed by the Trump administration,” Blinken said in remarks June 8 to a Senate committee. “If they are not inconsistent with the JCPOA, they will remain unless and until Iran’s behavior changes.”

A report that China’s crude imports fell 15% year-over-year in May has weighed on Asian prices, although refinery maintenance may account for a portion of the decline.

The U.S. dollar is showing signs of strength, as the Federal Reserve may consider tapering its bond-buying stimulus, a bearish development for dollar denominated assets such as oil.

Finally, the 40% run-up in prices so far this year to the $70s may have led to profit taking on the part of oil traders.

Goldman says US is reopening

The Goldman Sachs Research “U.S. Reopening Scale” hit “7” at the beginning of June, for first time since the onset of COVID-19.

The position of the scale - with 1 being in lockdown and 10 being fully open - is based on several data sources across key stay-at-home and back-to-normal categories, and their growth (or decline) relative to a pre-pandemic baseline, Goldman said in a June 4 release.

Back-to-normal trends such as seated diners from OpenTable, box office trends and online travel all improved versus the prior week, Goldman said.

Google measures of transit mobility levels are now about 19% below pre-COVID levels, versus 40% below in February, Goldman said. Meanwhile, gasoline demand is now comparable to 2019 levels.

Workplace mobility, however, has been slow to improve - 31% below pre-COVID levels currently, largely unchanged from 30% earlier in February, which is supporting at-home purchasing behaviors like food delivery, Goldman said.

“How quickly people return to the office and how closely attendance resembles pre-pandemic levels has emerged as a critical debate across multiple industries,” Goldman said. “Corporate America will return to the office over the next six months, which - coupled with strong office employment growth - will support gradual occupancy recovery for office properties.”

Goldman Sachs remains bullish on oil prices.

Jeff Currie, Goldman Sachs global head of commodities research, told Bloomberg Television June 2 that oil will benefit from spending on green energy projects.

Green CAPEX stimulates oil as well as the metals, Currie said.

“We think right now, given the underperformance of oil, oil could be the real sneaker over the course of the next six to eight weeks,” he said.






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