Oil futures traded lower Thursday, taking a breather after three consecutive winning sessions, with investors assessing the outlook for demand ahead of the end of summer driving season in the U.S.
West Texas Intermediate crude for October delivery fell 51 cents, or 0.7%, to $67.85 a barrel on the New York Mercantile Exchange. October Brent crude the global benchmark, declined 55 cents, or 0.8%, to $71.70 a barrel on ICE Futures Europe. November Brent, the most actively traded contract, was off 53 cents, or 0.7%, at $70.75 a barrel.
Based on trading in the most active contracts, WTI remains up 9% for the week, while Brent is up 8.5%.
Crude has rebounded sharply from last week’s rout, finding support on expectations the spread of the coronavirus delta variant was near its peak. Weekly U.S. data released Wednesday showed a further decline in U.S. crude inventories and a rise in implied demand for gasoline.
“Bigger-than-expected storage draws in crude oil and gasoline should help sustain the rally currently under way from three-month lows,” said Robert Yawger, executive director for energy futures at Mizuho, in a note.
“Generally speaking, the ideal summer driving season should see refiners draw on crude-oil storage in an effort to satisfy gasoline demand without adding too much gasoline and killing the golden goose,” he said. “Refiners have done an excellent job of feathering that math this summer, consistently posting crude oil draws while still managing to drain gasoline storage to multi-month lows.”
Summer driving season in the U.S. is the period between the Memorial Day weekend in late May and Labor Day weekend. Labor Day this year falls on Sept. 6.
With distillate demand remaining at the previous week’s high level, overall fuel demand reached its highest level since March 2020, said Carsten Fritsch, commodity analyst at Commerzbank, in a note. “That said, the summer driving season will be ending in around 1½ weeks — after which a period of weaker demand will begin,” he added.