Oil futures traded lower Friday, pulling back a day after U.S. prices tallied their longest streak of consecutive session gains in nine years, but remained on track to score a second weekly climb in a row.
A move higher in the last few minutes of trading on Thursday allowed oil futures to notch a ninth straight session of gains. That was the longest winning streak since January 2010 for the U.S. benchmark. For global benchmark Brent, it was the longest in more than 11 years.
“I think oil prices went up too high too quick, without a pause, so what we are seeing could simply be profit taking at around key resistance levels,” said Fawad Razaqzada, market analyst at Forex.com. However, “fundamentally, the outlook doesn’t look too bright. Not only is non-OPEC supply [looking] set to rise, but the demand outlook doesn’t look too great this year.”
In Friday dealings, West Texas Intermediate crude for February delivery
fell $1.37, or 2.6%, to $51.22 a barrel. The settlement Thursday at $52.59 a barrel on the New York Mercantile Exchange was the highest since Dec. 7, according to Dow Jones Market Data. WTI was poised for a weekly rise of about 6.9%.
Prices climbed out of a bear market Wednesday and as of Thursday’s settlement, have climbed by about 24% from the 52-week low of $42.53 on Dec. 24.
March Brent crude
declined by $1.11, or 1.8%, to $60.57 a barrel, with prices looking at a gain of 6.1% for the week. The settlement at $61.68 a barrel on ICE Futures Europe Thursday was the highest since Dec. 4.
The market moved higher just ahead of the oil settlement Thursday after Federal Reserve Chairman Jerome Powell stressed again that the central bank is flexible and patient and can change policy on a dime if the economic outlook worsens, a move seen potentially supportive for future oil demand. Following the comments, the dollar continued to strengthen and U.S. benchmark equity indexes traded higher as oil futures settled.
“Powell took the spotlight amid a Fedspeak frenzy echoing his recent comments from last week that the central bank’s commitment was to proceed with caution on the monetary policy, which of course was viewed very favorably by oil markets as a Fed pause will be great for risk assets,” said Stephen Innes, head of Asia-region trading with Oanda.
Overall, the recent advance for the energy complex has been powered by optimism over U.S.-China trade talks, as well as a December output drop from major producers and a decline in last week’s U.S. crude inventories. Oil production from the Organization of the Petroleum Exporting Countries fell by 630,000 barrels a day to a six-month low of 32.43 million barrels in December, according to an S&P Global Platts survey released earlier this week.
“A major bull-run is still far from formulating” in the oil market, and “prices are still close to 30 percent lower than the recent highs in October, to put the current levels in perspective,” said Balint Balazs, global commodity analyst at Schneider Electric. “For the near-term, however, the OPEC+ cuts, the continuous drop in Iranian exports, and a weaker dollar could help support crude prices.”
Oanda’s Innes said “the market is latching on to the recent industry insider reports that Iran will see its crude exports quashed further in January as it struggles to find new buyers amid fresh U.S. sanctions even though its traditional customers secured waivers.”
Meanwhile, over in the U.S., Baker Hughes reported Friday that the number of domestic rigs drilling for oil fell for a second week in a row—by 4 to stand at 873 this week, suggesting a slowdown in crude production.
On Nymex, prices for petroleum-products edged lower along with oil. February gasoline
fell 2.2% to $1.40 a gallon, with prices set to climb by about 3.9% for the week, while February heating oil
shed 1.6% to $1.876 a gallon, trading roughly 6% higher on the week.
February natural gas
added 3.4% to $3.069 per million British thermal units, contributing to a weekly rise of about 0.8%.
The EIA reported Thursday that domestic supplies of natural gas fell by 91 billion cubic feet for the week ended Jan. 4. Analysts polled by S&P Global Platts had forecast a decline of 84 billion cubic feet, on average, while the five-year average decline stands at 187 billion. The data, however, included a revision that resulted in decreased working gas stocks of about 4 billion cubic feet in the Mountain region last week.
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