Oil Price Fundamental Daily Forecast – Supported by Robust U.S. Economic Data; Increasing Gasoline Demand

U.S. West Texas Intermediate and international-benchmark crude oil futures are trading higher on Friday, boosted by strong U.S. economic data and expectations that the strong global economic recovery will lead to a rebound in demand, outweighing concerns over more supply from Iran once sanctions are lifted.

Traders are pricing in a huge jump in global oil demand with some forecasts calling for a 100 million barrel per day increase in the third quarter as the summer driving season opens in the United States and Europe. Expectations that increased vaccinations will lead to the reopening of many economies are also helping to offset demand worries over COVID-19 breakouts in Japan and India.

At 13:46 GMT, July WTI crude oil futures are trading $66.90, up $0.05 or +0.07% and August Brent crude oil is at $69.22, up $0.02 or +0.03%.

More than 34 million Americans are expected to take to the highways between May 27 and May 31, the holiday weekend which marks the start of the summer driving season.

“Gasoline demand has now exceeded 2019 levels in many areas,” ANZ analysts said in a note.

Strong US Economic Data Lending Support for Higher Prices

Data on Thursday showed the number of Americans filing new claims for unemployment benefits dropped more than expected last week as layoffs subsided. The U.S. Department of Labor said there were 406,000 initial jobless claims the week-ended May 21, below the 425,000 forecasted by economists polled by Dow Jones.

A separate report from the Commerce Department confirmed economic growth accelerated at a 6.4% annualized rate last quarter.

On Friday, a key inflation indicator – the core personal consumption expenditures Index – rose 3.1% in April, faster than expectations of a 2.9% increase but not as hot as many on Wall Street feared. Meanwhile, the savings rate remained elevated at 14.9% last month, while consumer spending rose 0.5%, in line with estimates.

Crude oil prices are also being supported as investors increase bets on a comprehensive infrastructure package that could further boost the economic recovery. Senate Republicans unveiled a $928 billion infrastructure counteroffer to President Joe Biden on Thursday. However, that’s well below Biden’s most recent proposal of $1.7 trillion.

OPEC+ Decision on Tap

On June 1, OPEC and its allies will sit down to discuss current production levels. This meeting may be a little more complicated than recent meetings as the group will have to find a way to balance expectations of a recovery in demand against a possible increase in Iranian supply. However, most traders expect OPEC+ to stick to the existing pace of gradually easing oil supply curbs at its meeting on Tuesday.

For a look at all of today’s economic events, check out our economic calendar.