Oil futures climbed Friday, on track to post back-to-back weekly gains, with prices getting a boost following recent data showing a third straight weekly decline in U.S. crude inventories.
Price action
-
West Texas Intermediate crude for August delivery
CL00,
+1.69%CLQ23,
+1.69%
rose $1.19, or 1.7%, to $73.02 a barrel on the New York Mercantile Exchange, with the front-month contract on track for a more than 3% weekly rise, FactSet data show. -
September Brent crude
BRN00,
+1.58%BRNU23,
+1.58%,
the global benchmark, gained $1.02, or 1.3%, to trade at $77.54 a barrel on ICE Futures Europe, advancing 2.8% for the week. -
August gasoline
RBQ23,
+1.54%
rose 2.1% to $2.60 a gallon, up around 2% for the week, while August heating oil
HOQ23,
+3.23%
was up 3.1% at $2.56 a gallon, set for a more than 4% weekly rise. -
August natural gas
NGQ23,
+0.23%
rose 1.5% to $2.65 per million British thermal units, but headed for a 5.3% weekly drop.
Market drivers
Crude prices found support Thursday after the Energy Information Administration on Thursday reported that U.S. commercial crude inventories fell by 1.5 million barrels for the week ended June 30. That followed back-to-back weekly declines.
On average, analysts polled by S&P Global Commodity Insights expected the report, to show a decline of 3.6 million barrels.
The EIA report also revealed weekly inventory decreases of 2.5 million barrels for gasoline and 1 million barrels for distillates.
Oil also gained this week after Saudi Arabia and Russia extended their production cuts, though prices continue to “find resistance as the Federal Reserve has hinted at more interest-rate hikes to come, possibly at its policy meeting later this month, StoneX’s Kansas City energy team, led by Alex Hodes, wrote in Friday’s newsletter.
Overall, crude has remained stuck in a trading range, with upside limited by worries over global demand as traders fret over interest rate rises by the Federal Reserve and other major central banks, as well as China’s lackluster economic recovery following the lifting of strict COVID restrictions late last year.
The physical market for crude remains mixed, though prices for Forties crude — the North Sea grade seen as the most important physical marker due to its role in setting the Brent price — has been softening, said Michael Tran, analyst at RBC Capital Markets, in a note.
Given the sluggish physical market over the last few quarters, “it is challenging to have a highly convicted view on deploying upside risk into Brent spreads until there is indication that the physical market is clearing at an accelerated pace,” he wrote. “In the same vein, the soft market pricing appears to be reflecting little room for error.
“We believe that any true signs of physical strength should result in a new strong and swift change in trend for summer pricing,” Tran said.
Meanwhile, prices for natural gas continued to trade higher after the release of the EIA’s weekly report on U.S. supplies of the commodity.
The government agency reported on Friday that U.S. natural-gas supplies in storage rose by 72 billion cubic feet for the week ended June 30. Analysts had called for a storage increase of 65 billion cubic feet on average, according to a survey conducted by S&P Global Commodity Insights.
However, the EIA report, which was delayed by a day this week due to Tuesday’s Fourth of July holiday, included revisions to figures tied to reclassifications of some natural gas in storage from base gas to working gas. Working gas is the volume of gas available in the market.
The EIA’s reclassifications resulted in an increase of 4 bcf in working gas stocks in the nonsalt South central region, so the implied flow for the week is an increase of 68 bcf to working gas stocks, the EIA said.
