Futures Movers: Oil prices fall, but stay on track for longest streak of weekly gains since April

Posted By: EN Todayon: July 14, 2023In: General Energy News, Oil & Gas News

Oil prices headed lower on Friday, but looked to post their longest consecutive streak of weekly gains since April as production cuts and a weaker U.S. dollar have pushed prices higher.

Price action

West Texas Intermediate crude for August delivery
CL00,
-1.72%

CLQ24,
-1.21%
fell by $1.31, or 1.7%, to $75.58 a barrel on the New York Mercantile Exchange, paring its weekly rise to around 2.3%, FactSet data show.
September Brent crude
BRN00,
-1.60%

BRNU23,
-1.60%
fell by 96 cents, or 1.2%, to $80.40 a barrel on ICE Futures Europe, poised for a weekly rise of 2.5%. Brent and WTI prices based on the front-month contracts were up a third straight week, set to mark the longest consecutive weekly gains since the week ended April 14.
August gasoline
RBQ23,
-1.14%
declined 1% to $2.6509 a gallon, while August heating oil lost 1% to $2.5834 a gallon, with both poised to notch weekly gains.
August natural gas
NGQ23,
-1.45%
shed 0.9% to $2.522 per million British thermal units, trading more than 1% lower for the week.

Market drivers

Crude-oil futures were lower on Friday, but remained higher for the week and was on track to rise for a second straight month in July.

Signs that U.S. inflation is waning more quickly than economists had expected undermined bond yields and the dollar fell sharply in the past week, helping to boost prices of many dollar-denominated commodities, including oil.

“The narrative that the Federal Reserve is winning the fight against inflation got a boost as both CPI and PPI came in weaker than expected this week, leading to a fresh rally for stocks, oil, bonds and foreign currencies,” said Fawad Razaqzada, market analyst at City Index and FOREX.com.

“The fact that the dollar fell, this has helped to boost the prices of all buck-denominated assets, including crude oil, gold, silver and copper,” he said.

The ICE U.S. Dollar Index
DXY,
+0.06%,
a gauge of the U.S. dollar’s strength compared with its main rivals, rose 0.2% to 99.925 in Friday dealings, but the index hit its lowest level in more than a year a day earlier and trades more than 2% lower for the week.

Still, Stephen Innes, managing partner at SPI Asset Management, told MarketWatch that he was very surprised that the oil markets have moved higher for the week, even as U.S. government data revealed a weekly rise in crude inventories when a decline or small build was expected.

“I think the market was in soft [economic] landing mode and that probably still is the case currently,” he said.

Questions surround whether the oil market is actually seeing tighter supplies following production cuts by major oil producers. “Are we seeing the cuts, or are there still lots of barrels on the water courtesy of Russia and the numerous dark fleets?” said Innes.

Meanwhile, oil prices may find support from supply disruptions amid reports that major oil fields in Libya have been shut down, he said.

Production at Libya’s El Feel, Sharara and 108 oilfields was shut on Thursday in protest against the abduction of a former finance minister, Reuters reported Thursday afternoon, citing comments from a tribal leader.