Mayra P. Saefond and William Watts, MarketWatch

SAN FRANCISCO/NEW YORK
EnergiesNet.com 01 26 2024

Oil prices gave up early losses to finish higher on Friday — with production outages in the U.S., strong economic data and concerns about shipping in the Middle East contributing to a more than 6% weekly gain.

Price moves

• West Texas Intermediate crude for March delivery CL00, +0.28% CL.1, +0.28% CLH24, +0.28% rose 65 cents, or 0.8%, to settle at $78.01 a barrel on the New York Mercantile Exchange, with front-month prices up 6.5% for the week, according to Dow Jones Market Data. That is the biggest weekly rise since Sept. 1.
  
  
• March Brent crude BRN00, +0.08% BRNH24, +0.17%, the global benchmark, added $1.12, or 1.4%, at $83.55 a barrel on ICE Futures Europe, for a nearly 6.4% weekly rise — the largest since Oct. 13.
  
  
• February gasoline RBG24, +0.07% climbed 1.3% to $2.29 a gallon, ending 6.1% higher for the week.
  
  
• February heating oil HOG24, +0.99% tacked on 1.7% to $2.84 a gallon, for a weekly rise of 6.8%.
  
  
• Natural gas for February delivery NGG24, +0.26% settled at $2.71 per million British thermal units, up 5.5%, for a weekly rise of 7.7%.

Market drivers

Large U.S. oil supply and production drawdowns provided support for prices. However, “much of the day-to-day trading seems to really be getting driven by sentiment toward China,” said Colin Cieszynski, portfolio manager and chief market strategist at SIA Wealth Management.

“Oil soared the last two days as China stimulus boosted Hong Kong and Shanghai,” he said.

Prices had traded lower early Friday before recovering their losses. The pullback came after Reuters reported that Chinese officials asked Iran to help rein in attacks on ships in the Red Sea by Iranian-backed Houthi militants in Yemen, or risk business relations with Beijing. The report noted that China is seen as the buyer of around 90% of Iran’s crude exports.

The attacks have prompted strikes on Houthi targets by the U.S. military and its allies and forced the rerouting of cargo ships and oil tankers — creating delays and escalating shipping costs, but not yet disrupting oil flows from the Middle East.

Supply reductions out of the U.S. due to cold weather in North Dakota, Texas and elsewhere have received credit for much of oil’s gains this week.

This week’s rally represents a return to a “somewhat-normal winter” after what’s been referred to as the warmest December in 150 years, which reduced demand for heating oil and pressured prices for oil, said Jay Hatfield, chief executive officer at Infrastructure Capital Advisors.

Also see: Why natural-gas prices are falling despite the largest supply drop in 3 years

His company estimates WTI oil’s 2024 price range at $75 to $95, “based on global supply-and-demand analysis, supported by improving growth in China and India and continued OPEC production constraint.”

In a note, strategists at Macquarie said they remain “structurally bearish on crude but tactically neutral to slightly bullish until Middle East tensions either equilibrate or abate.”

“Barring an escalation, we anticipate price will stay in its current range for 1Q24 as no supply loss is expected,” they said.

marketwatch 01 26 2024