Baker Hughes reports a weekly rise in active U.S. oil-rig count
Oil settled higher Friday, following an intraday U-turn that prompted a swing to a weekly gain.
Expectations for growth in global crude demand outweighed pressure from concerns over strong U.S. production and a weekly rise in the number of active domestic oil rigs.
April West Texas Intermediate crude CLJ8, +1.73% on the New York Mercantile Exchange rose $1.15, or 1.9%, to settle at $62.34 a barrel after making only modest moves in either direction in early trading. It saw its highest finish since March 6 and climbed roughly 0.5% for the week, according to FactSet data.
May Brent crude LCOK8, +1.34% the global benchmark, added $1.09, or 1.7%, to end at $66.21 a barrel on ICE Futures Europe. That was its highest finish month to date and it rose 1.1% for the week.
The market went “from low volatility to wow,” said Phil Flynn, senior market analyst at Price Futures Group. There really wasn’t any one particular piece of fundamental news that drove the intraday turn higher, he said, adding that “when oil went higher on the week, prices exploded.”
“The consumer sentiment number was strong and that really signals record gasoline demand ahead,” he said. U.S. consumer sentiment in March rose to its highest reading in 14 years.
A monthly oil report from the International Energy Agency on Thursday said that global oil demand should grow by 1.5 million barrels a day, to average 99.3 million barrels a day in 2018. That was an upward revision of 90,000 barrels a day, compared with last month’s report.
But traders have been concerned about surging U.S. shale output.
Offering a peek at future production, Baker Hughes BHGE, +3.45% reported Friday that the number of active U.S. rigs drilling for oil rose by four to 800 this week. The oil-rig count had fallen by four last week, marking their first decline in seven weeks.
The oil market is also seeing “a lot of short covering ahead of the April expiration on Tuesday” for WTI oil futures, said Flynn.
Meanwhile, expectations that the Trump administration will take a harder line on Iran’s nuclear deal or could move to impose an embargo on Venezuelan crude exports were providing some modest support, said Robert Yawger, director for energy at Mizuho Securities, in a Friday note.
The replacement of Secretary of State Rex Tillerson with Central Intelligence Agency Director Mike Pompeo is seen as heralding a potential tougher stance on Iran that could result in a partial reinstatement of export sanctions, analysts said. Other potential changes, including reports that national security adviser H.R. McMaster could soon be replaced, have underlined those expectations. The White House denied any changes were coming to the National Security Council.
In other energy trading, April natural gas NGJ18, +0.56% rose 0.3% to $2.688 per million British thermal units, but still marked a weekly loss of 1.6%.