Even restrictions caused by the Delta variant are having no effect: File Image/Pixabay
Further stockpile tightening in the U.S. combined with the realization that a return of some pandemic restrictions isn't denting demand resulted in more gains for crude on Thursday, with Brent topping $76 per barrel.
Shortly after Genscape data revealed that Cushing, Oklahoma stockpiles dropped 360,917 barrels from July 23, Brent climbed $1.31, or 1.75 percent, at $76.05 per barrel.
West Texas Intermediate settled up $1.23 cents, or 1.7 percent, at $73.62 per barrel.
Bart Melek, TD Securities
We have a fairly robust increase in risk appetite across the board
Despite the Delta variant continuing to make headlines and causing fear about blocking economic recovery, Citi analysts said in a note on Thursday, "While the risk to the demand outlook could increase due to governments across Europe reducing permission for public gatherings, we note that markets have already undergone several rounds of mobility restrictions... yet, the global recovery was not significantly derailed."
Helping along bullish sentiment was Iran, which on Thursday issued a statement blaming the U.S. for a delay in nuclear talks, which also means a delay in a return of Iranian barrels to the market.
Additionally, energy giant continue to post higher than expected earnings as the world slowly returns to normal: Royal Dutch Shell on Thursday reported adjusted earnings of $5.5 billion for the three months through to the end of June.
By contrast, the oil giant made $638 million over the same period a year earlier and $3.2 billion for the first quarter of 2021.
Still, while Delta has caused a return of some restrictions in the western world and therefore resulted in minimal economic impact, analysts are closely monitoring Asia: according to a report by Luxi Hong, oil analyst at BloombergNEF, restrictions in that part of the world have impacted road traffic, with congestion remaining significantly below normal in Kuala Lumpur, Bangkok, Jakarta, and Singapore.
Also, concerns are brewing that high oil prices will soon cause some producers, despite their self-discipline, to act: "It's a matter of when, not if, before we see more of a supply response in the U.S.," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.
Still, Bart Melek, head of commodity strategy at TD Securities, summarized overall sentiment by remarking, "Almost unequivocally, we have a fairly robust increase in risk appetite across the board; that's certainly rallying things up."