Oil futures pulled back Friday, but remained on track for strong weekly gains as a result of production outages in the U.S., strong economic data and concerns about shipping in the Middle East.
West Texas Intermediate crude for March delivery
fell 76 cents. or 1%, to $76.60 a barrel on the New York Mercantile Exchange, leaving it on track for a weekly gain of 4.6%.
March Brent crude
the global benchmark, was off 68 cents, or 0.8%, at $81.28 a barrel on ICE Futures Europe, set for a 3.5% weekly rise.
Oil futures were softer after Reuters reported that Chinese officials asked Iran to help rein in attacks on ships in the Red Sea by Iran-backed Houthi militants 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 haven’t disrupted oil flows from the Middle East.
Supply reductions out of the U.S. due to cold weather in North Dakota, Texas and elswehere have received credit for much of oil’s gain this week. Upbeat U.S. economic data and talk of renewed economic stimulus measures by Beijing have also helped cheer expectations around demand.
“Overall, we remain structurally bearish on crude but tactically neutral to
slightly bullish until Middle East tensions either equilibrate or abate,” said strategists at Macquarie, in a note. “Barring an escalation, we anticipate price will stay in its current range for 1Q24 as no supply loss is expected.”