Oil futures edged lower Friday, easing back from a three-session rise that allowed prices to rebound from Monday’s drop to the lowest settlements since May.
“Traders were uncertain as to whether the OPEC+ agreement was bullish, representing continued cohesion, or bearish, signaling more oil on the market,” Michael Lynch, president at Strategic Energy & Economic Research, told MarketWatch. The Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, decided on Sunday to gradually increase production levels each month starting in August.
“Traders were uncertain as to whether the OPEC+ agreement was bullish, representing continued cohesion, or bearish, signaling more oil on the market.”
— Michael Lynch, Strategic Energy & Economic Research
Meanwhile, the spread of coronavirus delta variant is “seemingly bearish, but the demand data, at least for the U.S., remains bullish,” said Lynch. That “gives you a price on the seesaw.”
West Texas Intermediate crude for September delivery
fell 12 cents, or 0.2%, to $71.79 a barrel on the New York Mercantile Exchange, leaving the U.S. benchmark on track for a 0.1% weekly loss, based on the front-month contracts.
September Brent crude
the global benchmark, was off 15 cents, or 0.2%, at $73.64 a barrel on ICE Futures Europe, leaving it up less than 0.1% for the week.
Crude plunged Monday, with WTI dropping more than 7%, in a broad selloff that was attributed in part to worries about the spread of the delta variant of the coronavirus and it’s impact on energy demand. Crude and other assets, including equities, subsequently bounced back, posting gains for three sessions in a row, as investors proved eager to buy the dip.
The market’s rebound “confirms our hypothesis that the selloff was ultimately sparked by external factors,” said Eugen Weinberg, commodity analyst at Commerzbank, in a note.
Weinberg said it also backs up the expectation that the OPEC+ agreement to add 400,000 barrels a day each month to output as it unwinds production curbs will prevent a repeat of last year’s breakdown in the cartel.
“The supply situation remains tight, while the agreement underlines the unity of OPEC+, and the response of non-OPEC+ producers so far to the significantly higher prices leaves much to be desired,” he wrote. “This suggests that OPEC+ will maintain its ‘pricing power,’ which will lead to high prices.”
Data from the Energy Information Administration released Wednesday revealed a weekly increase in U.S. crude supplies, following eight-straight weeks of declines, but stocks at the nation’s storage hub at Cushing, Okla. fell to their lowest since January 2020.
On Nymex Friday, August gasoline
fell by 0.3% to $2.27 a gallon, with prices up around 0.5% for the week. August heating oil
shed 0.3% to nearly $2.13 a gallon, headed for a weekly rise of 0.6%.
August natural gas
traded at $4.03 per million British thermal units, up 0.8% and poised to mark another finish at the highest since December 2018. For the week, prices have climbed by 9.8%.