Oil posts fifth consecutive weekly gain as market prepares to stay undersupplied (NYSEARCA: XLE)

Markets / May 28, 2022 / DRPhillF / 0

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energy (New York: XLE) topped the Standard & Poor’s sector ranking this week, + 8.2%US crude oil rose to its highest level in more than 11 weeks, with signs of tight fuel stocks continuing into the summer. Driving season begins on Memorial Day weekend.

“You have to assume things are going to get worse,” Daniel Yergin of Standard & Poor’s Global said this week, as the simultaneous increase in oil, natural gas and coal prices makes the current energy crisis the worst in the world since the oil shocks of the 1970s.

West Texas Intermediate crude for July (CL1:COM) posted its fifth consecutive weekly gain. + 4.3% To $115.07 a barrel, the best close of the next month’s contract since March 11, the near-term outlook remains bullish.

Bloomberg reported that the December-December spread, which traders use to gauge market health, widened to a new record high on Friday.

US Natural Gas (NG1:COM) jumped 6.5% for the week, its 12th rise in the past 15 weeks, largely due to Europe’s stated desire to replace Russian gas flows with LNG from the US or other friendly places.

“US driving season and strong travel demand should help [oil prices]“With supply growth lagging behind demand growth, the oil market is likely to remain undersupplied,” says UBS analyst Giovanni Stonovo.

With the average price of regular unleaded gasoline in the United States at a record $4.60/gallon, the Biden administration is said to be reaching out to oil companies to inquire about restarting shuttered refineries.

More than 1 million barrels per day of US oil refining capacity (about 5% overall) has been shut down since the start of the pandemic, and global capacity has shrunk by an additional 2.1 million barrels per day, according to estimates by energy consultancy Turner, Mason & Co.

“The OPEC+ meeting is the main event to watch next week,” says Oanda’s Craig Erlam, “but even if we get a commitment to increase targets – which is unlikely – it will likely only increase the amount they themselves won’t reach.”

This week’s top 10 gainers in energy and natural resources: (New York Stock Exchange: PLG) + 48.1%(New York Stock Exchange: LPI) + 35.4%(HMLP) + 34.2%(CRK) + 33%(SM) + 32.3%(SWN) + 31.4%(FRO) + 30.8%(he is) + 29.6%(RRC) + 28.3%(AR) + 26.8%.