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Crude oil futures pushed higher Thursday after two days of selling, as positive U.S. economic data bolstered expectations of a soft landing for the U.S. economy, while Middle East political tensions continued to provide underlying support to prices.
Fresh data showed U.S. retail sales rose by a higher than expected 1% in July and a smaller than expected increase in the number of Americans filing for unemployment benefits, coming a day after a report that U.S. consumer prices in July, which reinforced expectations the Federal Reserve will cut interest rates next month.
Fears of an Iranian strike on Israel in retaliation for last month’s assassination of a top Hamas official in Tehran have faded somewhat, but are still supporting oil prices, but strategists at Rabobank said the actual threat to crude supplies flowing out of the region has been overstated.
“The concerns of an escalation in the Middle East between Iran and Israel again remain overblown with regard to elevated crude oil prices,” according to Rabobank.
“Only direct action between Saudi Arabia, Iran and the United States toward some kind of blockade or closure of the Strait of Hormuz will materially affect the global crude oil and natural gas supply,” although fears of a wider conflict will keep Brent crude from dropping below $70/bbl, the bank wrote, describing escalation as a ‘sell the spike, buy the dip’ narrative.”
Front-month Nymex crude oil (CL1:COM) for September delivery settled +1.5% to $78.16/bbl, and front-month October Brent (CO1:COM) finished +1.6% to $81.04/bbl, a day after both benchmarks had fallen more than 1% as U.S. crude inventories increased unexpectedly.
Meanwhile, front-month September Nymex natural gas (NG1:COM) ended -1% to $2.197/MMBtu, after briefly touching their highest intraday level nearly five weeks after U.S. government data revealed a summer decline in weekly domestic supplies.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG)
The U.S. Department of Energy said it had purchased 1.5M barrels for January delivery to Bayou Choctaw in Louisiana, as it slowly replenishes the Strategic Petroleum Reserve after the largest ever sale from the stockpile in 2022.
Earlier this week, the DoE said it aims to buy 2M barrels per month of domestically produced sour crude for delivery in January-March 2025, to be stored at the SPR’s Bryan Mound site in Texas.
