Oil settles higher, scores a second straight weekly gain

MarketWatch

Baker Hughes reports a weekly rise in active U.S. oil-rig count

AFP/Getty Images
By

MYRAP. SAEFONG

MARKETS/COMMODITIES REPORTER

WILLIAMWATTS

DEPUTY MARKETS EDITOR

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.

Read: How Venezuela could be the ‘final element’ that tips oil market into deficit

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.

Read: Here’s how Rex Tillerson’s exit could move oil prices

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%.

April gasoline RBJ8, +0.87%  added 1.1% to $1.946 a gallon—roughly 2.2% higher for the week, while April heating oil HOJ8, +0.93% rose 1% to $1.912 a gallon, for weekly rise of 1.3%.

U.S. oil benchmark ends below $60 a barrel for first time in 2018

MarketWatch

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By

MyraP. Saefong

Markets/commodities reporter

NeandaSalvaterra

Oil futures fell for a sixth straight session on Friday, with the U.S. benchmark settling below $60 a barrel for the first time in 2018 to notch its biggest weekly loss in more than a year.

Data released Friday revealed the biggest weekly jump in the number of U.S. oil-drilling rigs since January 2017, contributing to concerns about a surge in U.S. production.

March West Texas Intermediate crude CLH8, -3.43% dropped $1.95, or 3.2%, to settle at $59.20 a barrel on the New York Mercantile Exchange. Prices saw their lowest finish since Dec. 22. For the week, it was down roughly 9.6%, which was the biggest such decline since January 2016.

April Brent crude LCOJ8, -3.24% the global oil benchmark, fell $2.02, or 3.1% to end at $62.79 a barrel on London’s ICE Futures exchange. Brent, which settled at its lowest since Dec. 13, retreated roughly 8.4% this week.

Baker Hughes BHGE, -3.64%  on Friday reported that the number of active U.S. rigs drilling for oil jumped by 26 to 791 this week. That marked a third straight week of increases and the largest weekly rise in more than a year.

This offers a “path for much more than a million barrels a day U.S. production increase this year, but prices will need to remain above $50,” said James Williams, energy economist at WTRG Economics. “Not a good Friday for OPEC.”

Until recently, oil prices have been buoyed by production cuts from the Organization of the Petroleum Exporting Countries and other large producers among other threats to supply.

However, OPEC member Iran also plans to raise its oil production in the next four years, according to a report from Reuters.

That has “added to market fears of an increase in global supplies,” said Mihir Kapadia, chief executive officer and founder of Sun Global Investments. “With reports suggesting China could be launching its crude oil futures contract next month, traders could be looking to the Far East to see how such a move could affect global prices.”

Oil-market fundamentals are also changing as recent increases in prices provided incentive for the U.S. to crank up output.

In a monthly report this week, the Energy Information Administration forecast record U.S. crude production of 10.59 million barrels a day this and 11.18 million barrels a day next year. A separate report from the agency also revealed that daily domestic output topped 10 million barrels a day last week—the highest such figure based on EIA records dating back to 1983.

Meanwhile, the downturn in the oil market has come amid a recent selloff in the equity markets, as investors there fret about the potential for higher inflation and central bank action. Stocks in Europe and Asia were on pace on Friday for their worst week in two years after a late slump Thursday pushed the Dow Jones Industrial Average DJIA, +1.38%  and S&P 500 SPX, +1.49%  into correction territory. U.S. stocks saw volatile Friday, with the Dow was set for a weekly loss of nearly 6%.

In other energy dealings, March gasoline RBH8, -3.66%  dropped 3.7% to $1.70 a gallon, with prices suffering a weekly loss of 9.2%, while March heating oil HOH8, -3.66%  lost 3.5% to $1.855 a gallon—down about 9.7% on the week.

March natural gas NGH18, -3.41%  fell 4.2% to $2.584 per million British thermal units, its lowest finish since late February 2017, for a weekly decline of 9.2%.

—Sara Sjolin contributed to this article