Reuters
Crude-oil futures inched higher Friday, on track for the best weekly performance since July last year, after days of being driven by fears of a military conflict in Syria.
A report from the International Energy Agency on Friday indicated that OPEC soon will have succeeded in reaching its target for reducing the global supply glut.
May West Texas Intermediate crude tacked on 12 cents, or 0.2%, to reach $67.19 a barrel on the New York Mercantile Exchange. For the week, the U.S. oil benchmark was set for a rally of more than 8%, which would mark its best weekly percentage performance since late July of last year.
June Brent added 52 cents, or 0.7%, at $72.54 a barrel on ICE Futures Europe. For the week, in the international benchmark was up roughly 8%.
On Friday, the IEA indicated that global oil stockpiles are dwindling and approaching the five-year average the Organization of the Petroleum Exporting Countries is targeting.
“It is not for us to declare on behalf of the Vienna agreement countries that it is ‘mission accomplished,’ but if our outlook is accurate, it certainly looks very much like it,” the IEA said in its report.
The Vienna agreement refers to the group of OPEC and non-OPEC countries that in 2016 agreed to cut output in an effort to reduce a global supply glut that had dragged oil prices substantially lower. The IEA report echoes the monthly data from OPEC earlier this week, which showed the group’s output declined by 201,000 in March and that the supply surplus is evaporating.
The IEA also noted that the continuing U.S.-China trade spat could dent oil demand.
Longer term, “we are bullish on oil prices as continued global economic growth drives demand higher by approximately 1.5% per year,” said Jay Hatfield, chief executive officer and founder of InfraCap. Global supply also “remains constrained by declines in Venezuela production, flat to declining production in offshore areas such as the North Sea, offset by steady growth in U.S. production of approximately 1 million barrels per day.”
Baker Hughes will offer a peek at U.S. oil activity when it releases weekly data on the number of active domestic oil rigs later Friday.
Hatfield expects WTI to trade in the $60-70 range this year and $70-80 in 2019, “with more risk to the upside.”
Still, market participants said crude futures have come under pressure amid fears that Russia may retaliate against the U.S. by imposing sanctions in response to sanctions levied against Moscow last week in response to what the U.S. said was attempts to subvert Western democracies, and malicious cyber activities.
“This news offset good news about the ratcheted down of trade tensions with China and the possibility the U.S. could be re-entering the [Trans-Pacific Partnership],” said Phil Flynn, senior market analyst at Price Futures Group, in a note.
The fear is that he sanctions from Russia could hurt demand and push prices lower, he explained.
More broadly, the stellar weekly performances for both WTI and Brent this week come as geopolitical tensions have returned to the fore after a suspected chemical-weapons attack in Syria that killed civilians over the weekend. That matter is also complicated by Syria’s friendly ties with Russia, Iran and Turkey.
U.S. President Donald Trump on Wednesday warned Russia that he was ready to launch an imminent military attack on Syria, but toned down his rhetoric on Thursday.
Among energy products, gasoline inched 0.2% lower to $2.05 a gallon, still poised for an impressive 4.9% gain on the week. May heating oil added less than 0.1% at $2.086 a gallon—up about 6.5% for the week.
May natural gas rose 2.7% to $2.758 per million British thermal units, set for a weekly rise of 2.1%.