19/04/2024

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Oil stumbles to take gloss off weekly gain on OPEC+ supply cuts

Oil stumbles to take gloss off weekly gain on OPEC+ supply cuts

Oil fell for a second day to all-but-eliminate a weekly gain that’s been driven by extended supply curbs from OPEC+ leaders Saudi Arabia and Russia and lower inventories, which saw prices hit the highest this year.

West Texas Intermediate declined toward $86 a barrel after retreating by 0.8% on Thursday as technical indicators — including oil’s relative strength index — signaled that a near-term pullback was nigh. Oil fell on Friday alongside other raw materials including copper and iron ore as the US dollar headed for an eighth weekly gain, presenting a headwind for most commodities.

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Oil remains higher this quarter as the OPEC+ supply cuts boosted prices, with underlying metrics including key timespreads signaling a tighter market. Still, some banks remain cautious, with JPMorgan Chase & Co. saying crude is unlikely to see $100 a barrel this year as the demand outlook is challenging.

In the US, data showed nationwide crude stockpiles shrank by 6.3 million barrels to the lowest since December. Gasoline and distillate inventories also declined. The draws coincided with the strongest pace for exports since July.

“If these draws are not a sign of resilient domestic demand in the world’s largest economy, what is?,” said Priyanka Sachdeva, senior market analyst at Phillip Nova Pte in Singapore, referring to the drop the crude holdings. Still, some driving demand may have mellowed since Labor Day, she said.

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Prices:
  • WTI for October delivery fell 0.8% to $86.20 a barrel at 1:09 p.m. in Singapore.
    • The US benchmark is 0.8% higher this week following a 7.2% gain in the prior five-day span.
  • Brent for November settlement was 0.6% lower at $89.34 a barrel.

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