Oil futures traded near unchanged early Friday, but were on track for big weekly declines as investors shifted their focus away from tightening supplies after signs a surge toward $100 a barrel was destroying demand.
A surge in bond yields, with long-term Treasury rates hitting 16-year highs, also stoked concern about the economic outlook and prospects for demand.
Price action
-
West Texas Intermediate crude for November delivery
CL00,
-0.78%CLX23,
-0.78%
was flat at $82.31 a barrel on the New York Mercantile Exchange, on track for a weekly decline of 9.4%. -
December Brent crude
BRN00,
-0.58%BRNZ23,
-0.58%,
the global benchmark, was up 4 cents, or less than 0.1%, at $84.11 a barrel on ICE Futures Europe, leaving it down 8.9% for the week. -
November gasoline
RBX23,
+0.44%
rose 1.1% to $2.213 a gallon, trimming its weekly loss to 7.8%, while November heating oil
HOX23,
+1.74%
gained 1.6% to $2.915 a gallon, leaving it off 11.7% for the week. -
November natural gas
NGX23,
+1.07%
was up 0.2% at $3.173 per million British thermal units as it headed for a weekly rise of more than 8%.
Market drivers
Oil has pulled back hard after WTI last week briefly topped $95 a barrel for the first time since August 2022 and Brent moved within a few dollars of the $100 threshold.
Crude had rallied over the summer and into fall on fears of a growing supply deficit, exacerbated by Saudi Arabia’s implementation of a production cut of 1 million barrels a day in July, which was recently extended through year-end. Russia has also moved to cut exports by 300,000 barrels a day over the same stretch.
“The market’s perception of the situation, i.e. market sentiment, has done a complete U-turn in the past few days of trading, switching its focus from the currently tight supply to concerns about weaker demand,” wrote analysts at Commerzbank in a Friday note.
The reversal came after the U.S. Energy Information Administration on Wednesday reported that average gasoline demand over the last four weeks fell to its lowest level for this time of year in 25 years, they noted.
See: Demand destruction sinks oil prices as gasoline inventories send warning signal
Meanwhile, news reports said Russia’s government on Friday moved to lift a ban on most diesel exports that had been put in place last month, while a ban on gasoline exports remained in place.
