Oil Prices Climb as Sentiment Continues to Improve

Oil prices have bounced back after the last OPEC+ announcement sent them crashing, and the US Federal Reserve could send them higher still with optimistic messaging.

Oil markets were eagerly anticipating the start of peak driving season in the summer. On the other hand, gasoline demand so far has been mostly disappointing. This is with US consumption some 2% lower year-over-year. So will oil prices climb continue?

– Asia has been the first continent where gasoline weakness led to refinery run cuts. This is a glut of light distillate supply has pushed Singapore gasoline cracks below the $5 per barrel mark.

– US gasoline cracks are notably higher than elsewhere. Currently, it is around $22 per barrel. The high US refinery utilization rates create a lot of downside for gasoline, especially as gasoline stocks are the highest since 2021 for this time of the year.

– The pressure on gasoline might increase further down the line as this year’s two main refinery newbuilds, Nigeria’s Dangote and Mexico’s Olmeca, are both delayed and will not start up in time for the summer season.

Market Movers Due to Oil Prices Climb

– US refiner Phillips 66 (NYSE:PSX) agreed to sell its 25% stake in the Rockies Express Pipeline for some $1.28 billion including debt to privately owned Tallgrass Energy which owns the remaining 75% stake.

– Commodity trading giant Trafigura has agreed to pay a $55 million fine to settle charges of fraud and manipulation from the US Commodity Futures Trading Commission, having traded misappropriated Mexican gasoline.

– French oil major TotalEnergies (NYSE:TTE) sold its Brunei upstream business to Malaysian exploration firm Hibiscus Petroleum for $260 million, using those funds for further Namibia drilling.

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Source: Oil Price

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