Myra P. Saefong and Williams Watts, Market Watch
SAN FRANCISCO/NEW YORK
EnergiesNet.com 09 02 2022
Oil futures saw a modest gain on Friday, but posted a hefty weekly loss as investors awaited a meeting of the Organization of the Petroleum Exporting Countries and its allies early next week.
Price action
- West Texas Intermediate crude for October delivery CL.1, +0.74% CL00, +0.74% CLV22, +0.74% rose 26 cents, or 0.3%, to settle at $86.87 a barrel on the New York Mercantile Exchange after trading as high as $89.66 during the session. The U.S. benchmark, based on the front-month contract, logged a 4.6XX% weekly loss.
- November Brent crude BRN00, +0.28% BRNX22, +0.28%, the global benchmark, added 66 cents, or 0.7%, to $93.02 a barrel, for a nearly 6.1% weekly decline. WTI and Brent ended at roughly two-week lows on Thursday.
- Back on Nymex, October gasoline RBV22, +3.12% jumped 3.3% to $2.4636 a gallon, but saw an 8% weekly fall.
- October heating oil HOV22, +1.81% rose 0.5%, to $3.578 a gallon, for a 9.1% weekly fall.
- October natural gas NGV22, -3.89% lost 5.1% at $8.786 per million British thermal units, for a 5.2% weekly fall.
Market drivers
Crude prices fell this week as traders reacted to another COVID lockdown in China, with authorities putting restrictions on Chengdu, a city of 21 million. Worries about the global economic outlook as the Federal Reserve and other major central banks tighten monetary policy aggressively in an effort to wring out inflation has also been a weight on futures prices.
Attention is focused on Monday’s meeting of OPEC and its allies, a group known as OPEC+, when U.S. markets will be closed for the Labor Day holiday.
Read: Gas prices are falling ahead of Labor Day — here’s what could reverse the trend
The expanded cartel has unwound production cuts that were introduced after the onset of the COVID-19 pandemic in early 2020 and last month agreed to a modest output increase of 100,000 barrels a day for September, though surveys indicate that production remains below target.
Saudi Arabia’s energy minister last month floated the prospect of a production cut amid what he described as a disconnect between the physical and futures markets, though analysts largely expect OPEC+ to hold off on Monday.
Read: Why talk of an OPEC+ output cut has failed to revive oil prices
OPEC, the International Energy Agency and the U.S. Energy Information Administration have all forecast near-term oil surpluses, which likely explain Saudi talk of a cut and which also comes as talks continue toward restoring an Iranian nuclear accord that could see Tehran resume crude exports, said Carsten Brzeski, commodity analyst at Commerzbank, in a note.
“That said, this is unlikely to happen for the foreseeable future. All the same, the producer countries will no doubt signal their willingness to adjust output at short notice if required, and will consequently stick with their monthly meetings,” he wrote.
Also see: Baker Hughes data show a weekly drop in the number of active U.S. oil-drilling rigs
In the days and weeks to come, oil prices are likely to trade higher “on the rationale of getting into the [Atlantic] hurricane season,” which may disrupt oil supplies, as well as the possibility of output cuts by OPEC+, Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch Friday.
Meanwhile, finance ministers from the Group of Seven industrial powers have pledged to put in place a system designed to cap Russia’ income from oil sales, the Associated Press reported Friday.
“Already we have had a very predictable response from the Kremlin that warned that Russia will stop selling oil to any country that supports price caps for Russian oil,” said Phil Flynn, senior market analyst at The Price Futures Group, in a Friday report.
Also see: Oil prices mark their longest monthly losing streak in more than 2 years
U.S. natural-gas futures marked losses for the day as well as the week as traders weighed the likelihood of a resumption of gas flows to Germany through Gazprom’s Nord Stream 1 pipeline, which Russia said had been shut for repairs.
Gazprom extended its shutdown of the Nord Stream 1 pipeline on Friday, according to several news reports. The pipeline had been expected to reopen on Saturday.
marketwatch 09 02 2022
