Brent futures suffer a loss for the week
Oil futures declined on Friday, pressured by concerns about global energy demand, but U.S. prices managed to tally a gain for the week, their third in a row, as OPEC output cuts and U.S. sanctions on Venezuela and Iran look to further tighten supplies.
Crude prices continued to retreat from their four-month highs on Friday “due to lingering concerns of weakening future energy demand,” said Balint Balazs, global commodity analyst at Schneider Electric, in a note.
Data Friday showed the IHS Markit flash purchasing managers index for manufacturing in March fell to a 21-month low, with the U.S. flash manufacturing PMI at 52.5 in March from 53 a month earlier. The purchasing-managers-index readings for the eurozone also came in much weaker than expected.
The data as well as a slump in Treasury yields — and an inversion of the yield curve — underlined worries over global growth prospects—and energy demand.
West Texas Intermediate crude for May delivery CLK9, -1.68% on the New York Mercantile Exchange fell 94 cents, or 1.6%, to settle at $59.04 a barrel. The front-month contract ended higher for the week, up 0.4% from the week-ago finish, according to Dow Jones Market Data.
May Brent crude LCOK9, -1.15% lost 83 cents, or 1.2%, to $67.03 a barrel on ICE Futures Group, for a 0.2% weekly decline.
Prices pared some of their losses shortly after data from Baker HughesBHGE, -4.57% on Friday revealed a fifth consecutive weekly decline in the number of active U.S. oil rigs, suggesting a slowdown in oil drilling activity. The number fell by nine to 824 this week.
Meanwhile, Jay Hatfield, chief executive and portfolio manager at InfraCap LLC, attributed the weakness in oil to “strong technical resistance at the $60 area” for WTI, and “correlation of oil prices to the stock market, which is pulling back…after very dovish Fed policy announcement on rates and balance sheet stabilization.”
He expects oil prices to “consolidate the year’s gains in the current $55-$60 WTI range for the next 2-3 weeks until we get into the [second] quarter driving season, which should propel oil into a higher range of $60-$70 through the late summer.”
Prices for the U.S. and global crude benchmarks had climbed to the best levels of 2019 earlier this week, buoyed by expectations for tighter supplies on the back of output cuts by the Organization of the Petroleum Exporting Countries and its allies as well as ongoing U.S. sanctions on Venezuela and Iran.
Data also showed an unexpectedly large drop in U.S. supply. The Energy Information Administration on Wednesday said U.S. crude inventories fell by an unexpected 9.6 million barrels last week.
“It is also possible that less crude oil and oil products will reach the world market from Russia in the near future,” said Daniel Briesemann and the commodities strategy group at Commerzbank. “The Russian government decided [Thursday] that companies will have to sell a certain amount of gasoline and diesel on the domestic market in order to obtain an export permit. This is intended to prevent domestic fuel prices rising too sharply as a result of higher crude oil prices.”
Back on Nymex, April gasoline RBJ9, -0.06% rose 0.3% to $1.926 a gallon, with prices notching a weekly rise of 3.7%. April heating oil HOJ9, -1.19% shed 1.1% to $1.966 a gallon, ending just under 0.1% lower on the week.
April natural gas NGJ19, -2.41% settled at $2.753 per million British thermal units, down 2.4% Friday, and 1.5% lower for the week.