Oil futures settled Friday at their highest in more than a week, contributing to their largest gain since April with traders encouraged by signs of an improving demand outlook.
Price action
-
West Texas Intermediate crude for July delivery
CL00,
-0.35% CL.1,
-0.47% CLN23,
-0.47%
$1.16, or 1.6%, to settle at $71.78 a barrel on the New York Mercantile Exchange, with prices for the front-month contract marking weekly rise of 2.3%, according to Dow Jones Market Data. -
August Brent crude
BRN00,
-0.46% BRNQ23,
-0.46% ,
the global benchmark, added $94 cents, or 1.2%, at $76.61 a barrel on ICE Futures Europe, for a 2.4% weekly gain. Brent, as well as WTI settled at their highest since June 7 and saw their strongest weekly percentage rise since the period ending April 6. -
Back on Nymex, July gasoline
RBN23,
-0.18%
rose 1.5% to $2.68 a gallon, while July heating oil
HON23,
-0.05%
climbed 2.9% at $2.55 a gallon. Gasoline was up 3.4% for the week, while heating oil rallied by 8.1%. -
July natural gas
NGN23,
-0.49%
rose 3.9% to $2.63 per million British thermal units, set for a weekly jump of nearly 17%.
Market drivers
Crude prices on Friday marked a weekly rise following back-to-back weekly declines, after finding support in Thursday’s session when The Wall Street Journal reported that Chinese authorities were preparing aggressive economic stimulus measures.
Disappointment in the economic rebound by the world’s second-largest energy consumer has been a weight on crude prices in 2023, but not the only factor pressuring prices this year.
Read The U.S. will soon be in a recession, based on commodity price declines: strategist
“There are a number of key factors behind lower oil prices so far this year: a weaker-than-expected demand rebound from China, stronger-than-expected supply from Russia, rising U.S. crude inventories and increasing demand concerns — particularly in the western hemisphere,” said Matt Smith, lead oil analyst, Americas, at Kpler.
Given all of that, OPEC+, and particularly Saudi Arabia, are concerned for the rest of the year, “hence their production cut announced in early April, followed swiftly by the surprise reduction in Saudi output announced in early June, he told MarketWatch. The promise of a 1 million barrel per day cut from Saudi Arabia next month “appears the meteoric effort needed to hold prices from falling below $70” a barrel.
Data from Baker Hughes
BKR,
released Friday indicated that U.S. production may head for a decline, with the oil field services company reporting that the number of active U.S. rigs drilling for oil fell by 4 to 552 this week.
Meanwhile, new reports this week suggest an interim nuclear deal between the U.S. and Iran is near. Analysts say a full return of Iranian oil production would have a significant impact on the global market, but many don’t expect to see a deal that would ease oil sanctions on Iran.
Read: Talk of an interim U.S.-Iran nuclear deal is just ‘noise’, but has potential to ‘upset the oil applecart’
Natural-gas futures, meanwhile, have rallied, with front-month prices settling Friday at their highest since March 7.
Prices had also ended sharply higher Thursday after the EIA reported a smaller-than-expected climb of 84 billion cubic feet in U.S. natural-gas supplies in storage for the week ending June 9.
The National Oceanic and Atmospheric Administration eight- to 14-day temperature outlook shows expectations for above-average temperatures for most of the Mid-West and Southern regions of the lower 48 states, said Victoria Dircksen, commodity analyst at Schneider Electric, in a daily note. That will “likely add support to power generation demand in the latter half of June.”
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