NYMEX WTI Tops $67 as Upbeat Data Spurs Demand Optimism

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Following equity markets higher, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange advanced in early trade of the final session this month, with West Texas Intermediate settling at a 2-1/2 year high on the spot continuous chart Thursday as investors assess the impact of bullish economic data in the United States and eurozone on global demand growth this summer, while betting on the upside effect of President Joe Biden's $6 trillion budget proposal.

Near 7:30 a.m. ET, NYMEX July WTI advanced 39 cents to trade above $67 per barrel (bbl) and the front-month Brent contact on ICE gained 28 cents to $69.74 bbl ahead the July contract's expiration Friday afternoon. The next month delivered August Brent contact is trading at a 20-cent discount to the expiring contract. NYMEX RBOB June futures rallied 1.42 cents to $2.1660 gallon ahead of expiration, with the next month contract narrowing its premium to 0.30 cent. NYMEX June ULSD was up 1.11 cents to $2.0675 gallon and the next-month ULSD futures contract traded at $2.0654.

Oil futures extended higher for a sixth session Friday -- the longest streak of successive gains since February, underpinned by declining crude and refined product inventories in the United States and upbeat economic data from major global economies, suggesting robust demand growth this summer. Overnight data out of the eurozone showed economic sentiment across the 19-nation bloc increased sharply in April to a pre-crisis level of 114.5 as major European economies pushed for aggressive re-openings this month.

Industry confidence increased for the sixth month in a row and reached a new all-time high, while sentiment across services posted a third significant monthly improvement, exceeding its long-term average for the first time since March last year.

Domestically, investors await the final reading on consumer sentiment for May, with preliminary data indicating Americans increasingly worried about rising inflation and long-term purchasing power in an inflationary economy. These concerns could be rattled further Friday morning by the release of the Fed's preferred inflation gauge -- the PCE Price Index -- which is expected to show the fastest annual rate of increase since at least the early 1990s.

On the upside, U.S. economy is now growing at annualized rate of 10.1%, according to the Atlanta GDP Now model, far exceeding a 6.4% over the first three months of the year. Unemployment claims, meanwhile, fell each week this month to the lowest number of first-time filings since the beginning of the pandemic at 406,000, suggesting an accelerated recovery in the laggard labor market.

On Friday, The White House is expected to unveil a $6 trillion budget for fiscal year 2022, boosting funding for health care and education while increasing taxes on corporations and wealthy individuals.

Under the proposal, debt as a percentage of annual gross domestic product would exceed the level seen at the end of World War II and climb to 117% of GDP by the end of 2031, according to people familiar with the proposal. That would be up from about 100% this year.

Markets appear to be betting on the upside impact of a $6 trillion budget proposal for the world's largest economy, sending U.S. equities higher for a sixth consecutive session Friday. While seen as positive for equities and broader growth prospects initially, the injection of trillions into an economy already awash with liquidity has investors increasingly concerned about the pace of inflation and its impact on underlying commodity and asset prices.

Liubov Georges can be reached at liubov.georges@dtn.com

Liubov Georges