Oil futures ended lower on Friday, but production cuts and a weaker U.S. dollar helped prices post their longest consecutive streak of weekly gains since April.
Price action
-
West Texas Intermediate crude for August delivery
CL00,
-0.21% CLQ24,
+0.32%
fell by $1.47, or 1.9%, to settle at $75.42 a barrel on the New York Mercantile Exchange, paring its weekly rise to 2.1%, FactSet data show. -
September Brent crude
BRN00,
-0.30% BRNU23,
-0.30%
fell by $1.49, or 1.8%, to $79.87 a barrel on ICE Futures Europe, for a weekly rise of 1.8%. Brent and WTI prices based on the front-month contracts were up a third straight week, marking the longest consecutive weekly gains since the week ended April 14. -
August gasoline
RBQ23,
-0.14%
declined 1.3% to $2.64 a gallon, for a weekly rise of 2.1%, while August heating oil lost 0.5% to $2.60 a gallon, tacking on 1.5% for the week. -
August natural gas
NGQ23,
+0.32%
shed 0.2% to $2.54 per million British thermal units, settling 1.7% lower for the week.
Market drivers
Crude-oil futures finished lower on Friday, but tallied a third weekly gain in a row, and were on track to register a climb for a second straight month in July.
Signs that U.S. inflation is waning more quickly than economists had expected undermined bond yields and the dollar fell sharply in the past week, helping to boost prices of many dollar-denominated commodities, including oil.
“The narrative that the Federal Reserve is winning the fight against inflation got a boost as both CPI and PPI came in weaker than expected this week, leading to a fresh rally for stocks, oil, bonds and foreign currencies,” said Fawad Razaqzada, market analyst at City Index and FOREX.com.
“The fact that the dollar fell, this has helped to boost the prices of all buck-denominated assets, including crude oil, gold, silver and copper,” he said.
The ICE U.S. Dollar Index
DXY,
a gauge of the U.S. dollar’s strength compared with its main rivals, rose 0.1% to 99.896 in Friday dealings, but the index hit its lowest level in more than a year a day earlier and trades more than 2% lower for the week.
Still, Stephen Innes, managing partner at SPI Asset Management, told MarketWatch that he was very surprised that the oil markets have moved higher for the week, even as U.S. government data on Wednesday revealed a weekly rise in crude inventories when a decline or small build was expected.
“I think the market was in soft [economic] landing mode and that probably still is the case currently,” he said.
Questions surround whether the oil market is actually seeing tighter supplies following production cuts by major oil producers. “Are we seeing the cuts, or are there still lots of barrels on the water courtesy of Russia and the numerous dark fleets?” said Innes.
Data from Baker Hughes
BKR,
on Friday showed that the number of active U.S. rigs drilling for oil fell for a fifth consecutive week, down 3 at 537 rigs this week.
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Meanwhile, oil prices may find support from supply disruptions amid reports that major oil fields in Libya have been shut down, he said.
Production at Libya’s El Feel, Sharara and 108 oilfields was shut on Thursday in protest against the abduction of a former finance minister, Reuters reported Thursday afternoon, citing comments from a tribal leader.
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