Oil posts its highest finish since mid-March on stronger demand expectations, tighter supplies

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Oil futures finished higher on Thursday as brighter prospects for the Chinese and U.S. economy and tighter supplies helped lift prices to their highest finish since mid-March.

Price action
  • West Texas Intermediate crude for May delivery


    gained $1.40, or 1.9%, to settle at $74.37 per barrel on the New York Mercantile Exchange.

  • May Brent crude 

     , the global benchmark, gained 99 cents, or 1.3%, to $79.27 per barrel on ICE Futures Europe. Brent, as well as WTI, crude settled at their highest since march 13, according to Dow Jones Market Data.

  • Back on Nymex, April gasoline 
    lost nearly 0.3% at $2.6614 per gallon, while April heating oil
    declined by 1.3% to $2.6237 a gallon. The April contracts expire at the end of Friday’s session.

  • May natural gas
    fell by 3.7% to $2.104 per million British thermal units.

Market drivers

Oil prices may continue to climb if the global economic outlook improves, analysts said.

“Until the U.S. data tolls the recession bell, if broader markets remain in risk-on mode, oil could stay in relief rally mode supported by the same less threatening [Federal Reserve], a slightly weaker U.S. dollar, and hopes for the China recovery,” said Stephen Innes, managing partner at SPI Asset Management, in market commentary.

U.S. government data released Thursday was slightly downbeat, showing the growth rate of the U.S. economy at the end of 2022 was reduced to 2.6% due to weaker consumer spending. Separately, the number of Americans who applied for unemployment benefits last week rose to a three-week high of 198,000.

Read: Biden energy officials release strategy to boost offshore wind and cut its cost by 30%

The Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, will hold a committee meeting Monday to review the oil market, against a backdrop of a potential recession and concerns over the banking crisis.

Read: OPEC+ committee is set to review an oil market plagued by concerns over the banking crisis and a recession

Oil prices, for now, also likely found some support from a 7.5 million-barrel weekly decline in U.S. crude supplies reported by the Energy Information Administration on Wednesday. That was the largest weekly fall year to date.

Oil refiners are coming out of maintenance season and “demand for fossil fuels around the globe is surging,” said Phil Flynn, senior market analyst at The Price Futures Group, in a daily report. He believes those factors will contribute to what he refers to as a “new season of big petroleum supply draws in the coming weeks.”

Natural-gas futures on Nymex extended their decline to finish nearly 4% lower, after the EIA reported on Thursday a weekly decline in supplies of the commodity that was a bit lower than some market forecasts.

Domestic natural-gas supplies fell by 47 billion cubic feet for the week ended March 24, the EIA said. That compared with expectations for a decline of 56 billion cubic feet, according to a survey of analysts by The Wall Street Journal.

Meanwhile, the Freeport LNG export plant in Texas is on track to achieve full processing power Thursday after regulators indefinitely closed the facility last June after an explosion, StoneX’s Kansas City energy team, lead by Alex Hodes, wrote in Thursday’s newsletter. They said natural-gas flows into the facility reached 1.8 bcf Wednesday and were on pace to reach 2.1 bcf Thursday.

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