OIL FUTURES: Crude ends week higher amid US economic optimism, global supply risks

Crude oil futures settled higher July 15, as recession fears eased after a fresh round of US data painted a still-robust picture of the economy.

NYMEX August WTI settled $1.81 higher at $97.59/b and ICE September Brent climbed $2.06 to settle at $101.16/b.

"Crude prices surged after an impressive retail sales report reminded just how strong the US economy remains," OANDA senior market analyst Ed Moya said in a note. "The oil market was down earlier in the week on demand destruction fears, so today's retail sales report and University of Michigan consumer sentiment data helped undo some of that."

US retail sales surged 1% in June, Commerce Department data showed July 15, exceeding market expectations and cooling fears of an imminent recession that have weighed heavily on crude in recent sessions.

NYMEX August RBOB settled up 2.64 cents at $3.2132/gal and August ULSD rallied 4.96 cents to settle at $3.6990/gal.

With recession fears by the wayside, the market moved higher amid a focus on tight global supply, analysts said.

"Crude oil's term structure is screaming of tightening markets despite the soft price action in prices," TD Securities analyst said in a note. "Energy supply risks continue to rise with Biden in Jeddah set to leave the Middle East this week, with reports that no public announcement will be made on increasing oil supply."

The backwardation between front-month and year-ahead ICE Brent contracts has widened nearly $2/b since July 13, finishing the week at $15.82/b.

US President Joe Biden on July 15 met with Saudi King Salman and Crown Prince Mohammed bin Salman in Riyadh, and on July 16 Biden is expected to attend the Gulf Cooperation Council summit and have bilateral meetings with the leaders of the UAE, Iraq and Egypt.

However, the US does not expect to secure any oil supply commitments during President Joe Biden's visit to Saudi Arabia, but he will press the kingdom to act through OPEC+ in the coming weeks, National Security Advisor Jake Sullivan said July 15.

All eyes in the market will now shift to the next OPEC+ meeting, scheduled for Aug. 3, when ministers will formally set September production levels.

Sullivan said the White House is "hopeful that we will see additional actions by OPEC+ in the coming weeks."

Meanwhile, Europe could possibly be rationing energy this winter, Shell CEO Ben van Beurden said late July 14 at Aurora Energy's spring forum in Oxford.

"It would be unwise to ignore [Russian President Vladimir Putin's] threats. He is able and willing to weaponize energy," van Beurden said.

State-controlled Gazprom cut flows to Germany in the Nord Stream pipeline to just 40% of capacity in mid-June, citing maintenance issues with turbines at the Portovaya compressor station. The pipeline is also now undergoing annual maintenance, with flows cut to zero, and there are concerns that the link may not return following the work.