Oil is experiencing its fourth consecutive week of gains, driven by seasonal demand and record-breaking U.S. travel for the Fourth of July holiday.
Additionally, crude has faced supply issues related to geopolitical tensions in the Middle East and disruptions from hurricanes in the Caribbean.
$Crude Oil Futures(AUG4) (CLmain.US)$ fell while West Texas Intermediate (WTI) light crude prices soared above $84 a barrel on Tuesday, setting the stage to close at their highest level since April 16.
Record Travel Expected For Independence Day Holiday
The American Automobile Association (AAA) projects 70.9 million travelers will journey 50 miles or more during Independence Day week, a 5% increase over 2023 and 8% over 2019.
"With summer vacations in full swing and the flexibility of remote work, more Americans are taking extended trips around Independence Day," said Paula Twidale, senior vice president of AAA Travel. "We anticipate this July 4 week will be the busiest ever, with an additional 5.7 million people traveling compared to 2019."
Between June 28 and July 7, a record 60.6 million people will travel by car over Independence Day week, up 2.8 million from last year and surpassing the 55.3 million who traveled by car in 2019.
Car-rental giant $Hertz Global (HTZ.US)$ says Dallas, Denver, Salt Lake City, Los Angeles, and San Francisco are the cities displaying the highest rental demand during the holiday week. The busiest pick-up days are projected to be Friday, June 28, Saturday, June 29, and Wednesday, July 3.
Air travel is also expected to set a record, with 5.74 million people flying to their July 4 destinations, a 7% increase from last year and 12% from 2019. Domestic airfare is 2% cheaper, averaging $800 for a round-trip ticket. AAA recommends arriving two hours early, reserving parking, and using carry-on luggage to save time and money.
Over 4.6 million people will travel by bus, cruise, and train, a 9% increase from last year but slightly below 2019's 4.79 million. Cruises, especially to Alaska, are in high demand, with Seattle and Anchorage as top destinations. Cruise lines are offering discounts to fill older inventory as new ships enter the market.
Hurricanes, Geopolitical Frictions Weigh On Crude Supply
Oil prices have surged due to rising geopolitical tensions and an intensifying hurricane in the Caribbean.
ING commodity strategist Ewa Manthey noted, "The Israel-Hamas conflict continues to escalate and increases the risk of oil supply disruptions. Recent reports also suggest that the record-breaking Hurricane Beryl is intensifying, raising the chances of flooding rains and storm surges that could hit oil operations in the Gulf of Mexico later this week. This has also raised concerns over a severe hurricane season that is yet to come."
Technical Analysis Indicates Bullish Trends
David Morrison, senior market analyst at Trade Nation, commented, "Crude oil has finally broken out of its recent consolidation phase. Both Brent and WTI had spent over a week trading in a narrow range of less than $2. For front-month WTI, a floor was established just above $80, which also corresponded to the 100-day moving average."