Both U.S. and global crude benchmarks extended their gains into a third session on Friday, but the move won’t be enough to salvage the brutal weekly losses that helped drive prices to their lows of the year.
A supply build, including in the latest U.S. data out Thursday, has pushed the market down, as has evidence of weakening global economic growth and the decision by the Trump administration to grant waivers to major buyers of Iranian crude following the enactment of sanctions, a factor that had been expected to keep most Iranian oil off the market.
December West Texas Intermediate crude CLZ8, +2.20% rose $1.41, or 2.5%, to $57.87 a barrel, still down some 3.8% for the week. WTI’s late-week recovery allowed the benchmark to halt what had been a record 12-session streak of declines, which took it on Tuesday down to $55.69 on the New York Mercantile Exchange. It was the lowest closing price for a front-month contract since Nov. 16, 2017, according to Dow Jones Market Data. The December contract expires at Monday’s settlement.
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Global benchmark January Brent LCOF9, +1.98% added $1.53, or 2.3%, to $68.23 a barrel on Friday. Its close at $65.47 a barrel on ICE Futures Europe, along on Tuesday, meant it officially joined its U.S. counterpart in a bear market, defined as at least a 20% pullback from a recent high. The contract was headed for a roughly 2.9% retreat from where it finished last Friday.
Both WTI and Brent looked to suffer their sixth weekly loss in a row.
Supply concerns continue to drive trading. On Thursday, the Energy Information Administration reported that domestic-crude supplies rose for an eighth straight week—up 10.3 million barrels for the period ended Nov. 9. The build was offset by draws to product stocks including gasoline and distillate, however.
Crude stocks at Cushing, Okla., the delivery hub for Nymex oil futures, saw another large build last week, while U.S. production rose to another record, analysts noted.
“Price reaction to the U.S. inventory data shows that negative news is now largely priced in …this was the eighth consecutive weekly rise in U.S. crude oil stocks, during which time stocks soared by a total of 48 million barrels. This highlights the need for OPEC to cut production,” said Carsten Fritsch and the commodities team at Commerzbank, in a note.
“It is uncertain whether Russia will commit to this [production cut, as a non-OPEC ally]. President Putin was somewhat evasive on this subject yesterday. In his opinion, Russia could live very well with an oil price of $70,” the analysts added.
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The U.S., Russia and Saudi Arabia, all leading producers, are pumping crude at record levels, causing global supply to significantly outrun demand, a monthly update from the International Energy Agency showed earlier this week.
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Yet the price drop prompted the Organization of the Petroleum Exporting Countries and its allies, including Russia at that time, to signal last weekend that it could enact a joint production cut. Such a move would come just months after the group decided to ramp up production after more than a year of holding back output.
Baker Hughes will release its weekly U.S. oil-rig count at 1 p.m. Eastern time, offering a clue on potential production activity.
Natural-gas futures, meanwhile, has seen volatile trading and was poised to end the week around 15% higher, for a third straight weekly climb. December natural gas NGZ18, +4.26% added 6% to $4.282 per million British thermal units.
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Prices plunged by nearly 17% on Thursday as a weekly rise in U.S. supplies of the fuel came in at nearly double the five-year average. But it had posted gains in each of the previous four session, including an 18% jump to $4.837 on Wednesday that lifted prices to their higher settlement since February 2014.
Also on Nymex Friday, December gasoline RBZ8, +3.02% rose 3.2% to $1.606 a gallon, trading about 1% lower on the week, while December heating oil HOZ8, +0.79% rose 0.9% to $2.093 a gallon, set for a weekly loss of about 3.7%.
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