Oil futures: Prices rally after Biden Saudi visit, Brent around $106/b
Quantum Commodity Intelligence - Crude oil futures Monday were climbing higher after Saudi Arabia held back on any immediate production increase following US President Joe Biden's high-profile visit to the Kingdom, putting the focus back on the constrained supply side.
Front-month September ICE Brent futures were trading at $106.02/b (1740 GMT), compared to Friday's settle of $101.16/b.
At the same time, August NYMEX WTI was trading $101.76/b, versus Friday's settle of $97.59/b, while the more liquid Sep22 contract was trading $98.93/b versus the previous close of $94.57/b.
President Biden's visit to Saudi Arabia did not bring about any immediate pledge to boost oil production, although a senior Biden adviser said he expects US gasoline prices at the pump to fall toward $4 a gallon.
"It's not $5 anymore, it's now $4.55. And I expect it to come down more towards $4. And we already have many gas stations around the country that are below $4," Amos Hochstein, the White House's senior adviser for energy security, told CBS News on Sunday.
Global gasoline prices have been under strong downwards pressure since late June, particularly in Asia, where benchmark 92 RON cracks have slumped by $30/b in less than a month.
Monday's weaker dollar index also supported oil, dropping 1% to around 107 points.
Oil prices had already rebounded Friday, clawing back some of the week's sharp losses, amid prospects of a less aggressive US rate hike, although worries about a recovery in demand continue to drag on sentiment.
Markets were also nervous over the fate of the Nord Stream 1 gas pipeline, due to restart after maintenance later this week, but that remains in doubt with Russia claiming it first needs the return of a gas turbine currently stuck in Canada, which according to reports Monday was imminent.
"Annual maintenance of the Nord Stream pipeline is set to finish on 21 July, and the real concern is that gas flows do not resume once maintenance is complete," said Warren Patterson, head of ING's commodity research, nothing that prior to the annual maintenance, Russian gas flows along the pipeline were around 60% below normal levels.
Meanwhile, the head of the IEA has urged European governments to fire up oil-fired and coal-fired power stations to try to conserve gas ahead of winter in case of a shutdown or sharp reduction of Russian supply.
Analysts also noted China, the world's top commodity consumer, continues to struggle with Covid-19 cases and a challenged property sector added to weaker growth prospects.
The country reported 580 local cases on Saturday, according to the National Health Commission, up from 450 the day before and the highest daily count in nearly two months.
However, China's meteorological department said the heatwave conditions hanging over much of the country would continue this week, boosting energy demand to power air conditioning.
