The black gold marked its fourth weekly gain in a row, with WTI Crude oil July futures rising above $110 per barrel, as products market remain tight amid strong demand, trumping concerns about an economic slowdown that have roiled financial markets. Rising demand for motor fuels and shrinking inventories ahead of the summer driving season underscored a fundamentally tight supply situation even as broader economic fears shook equity markets. However, upside was capped amid reports that US will allow European companies still operating in Venezuela to divert more oil to the continent immediately. US crude oil inventories unexpectedly fell by 3.394 million barrels in the week ended 13^th May, after an 8.487-million-barrel addition in the previous week and crude stocks at Cushing, Oklahoma, delivery hub fell by 2.403 million barrels. Meanwhile, weekly CFTC data on futures and options showed that money managers have increased their bullish Nymex WTI crude oil bets by 35,878 net-long positions to 284,830. The net-long position was the most bullish in more than three months.

 

Outlook

 Rising fuel demand ahead of the peak summer season is draining gasoline stockpiles in the US, and refiners, already running near full bore, are having a hard time catching up. Gasoline demand rose last week despite record pump prices. In China, Shanghai did not signal any change to its planned end of a prolonged city-wide lockdown on 1^st June even though the city announced its first new COVID-19 cases outside quarantined areas in five days. Demand side remains strong ahead of US summer driving season and reopening of China. On the supply front, EU is hoping to clinch a deal on a proposed ban of Russian crude imports with exceptions for member states most dependent on Russian oil, such as Hungary. An official announcement is expected to come late next week. We expect MCX Crude oil June futures to rise towards Rs.8,900 per bbl for the coming week.