WTI on space for second weekly gain in a row

U.S. crude oil held firm above $81 per barrel on Thursday, with the benchmark heading for its second weekly gain in a row.

West Texas Intermediate has gained 4% this week, while global benchmark Brent is up 3.3%. JPMorgan forecasts Brent will hit $90 per barrel in September as the market tightens on falling inventories.

“Given the seasonal uptick in oil demand, refinery runs, and ongoing weather risks, and as OPEC and its allies extend production cuts through 3Q24, oil balances should tighten and inventories should begin to draw during the summer months,” analysts led by Natasha Kaneva, head of the global commodities strategy team at JPMorgan, told clients in a research note Thursday.

Here are today’s energy prices:

• West Texas Intermediate July contract: $81.63 per barrel, up 6 cents. Year to date, U.S. oil has gained 13.9%.
• Brent August contract: $85.38 per barrel, up 31 cents. Year to date, the global benchmark is ahead by 10.8%.
• RBOB Gasoline July contract: $2.49 per gallon, up 0.35%. Year to date, gasoline has risen 18.5%.
• Natural Gas July contract: $2.84 per thousand cubic feet, down 2.23%. Year to date, gas is up 13.1%.

Crude oil has proven resilient with upside momentum firming, Ryan McKay, senior commodity strategist at TD Securities, told clients in a research note Wednesday. McKay cautioned, however, that the rally could fade. Commodity trading advisors could ease up on buying and liquidate some of their lengths if U.S. oil drops below $80.33 and Brent falls under $84.92, McKay said.

Tensions are also escalating in the Middle East again, with Israel and the Iran-backed militia group Hezbollah threatening war.

Israel’s military said Tuesday in a statement on social media that “operational plans for an offensive in Lebanon were approved and validated.” On Wednesday, Hezbollah leader Hassan Nasrallah warned Israel in a televised speech that the militant would fight with “no rules and with no red lines” if war breaks out.

Oil prices rallied in April to annual highs as Iran and Israel nearly went to war. Traders shifted focus back to market fundamentals after tensions eased, unwinding the risk premium that had lifted crude futures.