Oil futures traded higher on Thursday as brightening prospects for the Chinese and U.S. economy have helped to keep prices of the critical commodity elevated.
Price action
- West Texas Intermediate crude for May delivery CL00, +1.82% CL.1, +1.82% CLK23, +1.82% gained $1.06, or 1.5%, to $74.03 per barrel on the New York Mercantile Exchange.
- May Brent crude BRN00, -0.10% BRNK23, -0.13% , the global benchmark, gained 77 cents, or 1%, to $79.05 per barrel on ICE Futures Europe.
- Back on Nymex, April gasoline RBJ23, -0.56% was down 0.4% at $2.6581 per gallon, while April heating oil climbed by 0.7% to $2.6746 a gallon.
- May natural gas NGK23, -3.53% fell by 2.5% to $2.129 per million British thermal units.
Market drivers
Oil prices may continue to climb if the global economic outlook improves, analysts said.
“So for now, until the U.S. data tolls the recession bell, if broader markets remain in risk-on mode, oil could stay in relief rally mode supported by the same less threatening [Federal Reserve], a slightly weaker U.S. dollar, and hopes for the China recovery,” said Stephen Innes, managing partner at SPI Asset Management, in market commentary.
U.S. government data released Thursday was slightly downbeat, showing the growth rate of the U.S. economy at the end of 2022 was reduced to 2.6% due to weaker consumer spending. Separately, the number of Americans who applied for unemployment benefits last week rose to a three-week high of 198,000.
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Oil prices, for now, also likely found some support from a 7.5 million-barrel weekly decline in U.S. crude supplies reported by the Energy Information Administration on Wednesday. That was the largest weekly fall year to date.
The fact that oil futures failed at the key technical resistance level of $73.85 for the second day in a row on Wednesday, despite a largely bullish set of weekly EIA data, specifically the demand metrics, “underscores the caution traders have towards the energy market here given the recent banking turmoil and lingering recession worries,” analysts at Sevens Report Research wrote in Thursday’s newsletter.
Natural-gas futures on Nymex continued to trade lower after the EIA reported on Thursday a weekly decline in supplies of the commodity that was a bit lower than some market forecasts.
Domestic natural-gas supplies fell by 47 billion cubic feet for the week ended March 24, the EIA said. That compared with expectations for a decline of 56 billion cubic feet, according to a survey of analysts by The Wall Street Journal.
Meanwhile, the Freeport LNG export plant in Texas is on track to achieve full processing power Thursday after regulators indefinitely closed the facility last June after an explosion, StoneX’s Kansas City energy team, lead by Alex Hodes, wrote in Thursday’s newsletter. They said natural-gas flows into the facility reached 1.8 bcf Wednesday and were on pace to reach 2.1 bcf Thursday.
