U.S. crude oil rises 2%, tops $83 per barrel ahead of Fourth of July holiday

Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S., April 21, 2020. Dronebase Dronebase | Reuters

U.S. crude oil futures on Monday rose 2% ahead of the Fourth of July holiday, after booking a 6% gain last month on the back of fears of a wider Middle East war and expectations of rising summer fuel demand.

Though oil prices have been steadily rising, the average price for a gallon of gasoline stands at $3.49 nationwide, down about 5 cents from last month, according to the motorist association AAA.

Gas demand has been soft but prices at the pump could rise with a record 60 million travelers expected to hit the roads ahead of Fourth of July, according to AAA.

Here are today's energy prices:

• West Texas Intermediate August contract: $83.35 per barrel, up $1.81, or 2.22%. Year to date, U.S. oil has gained 16.3%.
• Brent September contract: $86.53 per barrel, up $1.53, or 1.80%. Year to date, the global benchmark is ahead by 12.3%.
• RBOB Gasoline August contract: $2.57 per gallon, up 2.86%. Year to date, gasoline is up 22.4%.
• Natural Gas August contract: $2.50 per thousand cubic feet, down 3.84%. Year to date, gas is little changed.

Oil market speculators have added long positions, betting on higher prices as tensions between Israel and the Iran-backed Hezbollah militia in Lebanon have "proven to be a major driver of the strong price action of late," commodity strategists with TD Securities told clients in a note on Friday.

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wti vs. brent

"However, this increase in risk premium is only likely to support prices, rather than fuel a renewed rally," the TD strategists said.

Phil Flynn, senior market analyst at the Price Futures Group, said the Atlantic weather season remains a concern, with Hurricane Beryl barreling through the Caribbean as a Category 4 storm.

Beryl is unlikely to impact oil and refinery operations in the Gulf, said Bob Yawger, executive director of energy futures at Mizuho Securities.

"But the size and timing on the calendar are reason for concern," Yawger told clients in a Monday note. Gasoline prices would increase if a hurricane hits refinery facilities along the Gulf Coast, while oil would trade lower as unused barrels pile up, Yawger said.

JPMorgan, meanwhile, is forecasting a global oil liquids deficit of 1 million barrels per day, or bpd, in the third quarter and a large 1.9 million bpd drawdown in August. The investment back expects Brent to hit $90 per barrel by September.