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Crude oil prices posted weekly gains after posting consecutive losses as declining geopolitical risk perceptions sapped some momentum from the market, while an unexpectedly large drawdown in U.S. crude inventories was supportive.
A strong dollar and resilient inflation This week's U.S. data dashed hopes that the Federal Reserve would cut interest rates any time soon. put a ceiling on oil prices.
“Some geopolitical risk premium has been erased from the market, and now the market is We wait for the dynamics of supply and demand. in the next quarter, which should remain relatively tight,” says StoneX's energy team led by Alex Hodes.
Recent economic data has “shown signs of stagflation potentially affecting the economy,” with GDP rising at a meager 1.6% annual pace during the first quarter and inflation data hotter than some anticipated. Sevens report investigation Co-editor Tyler Richey says market clock.
But with the oil futures market still lagging – where oil prices for near-future delivery are higher than those for later deliveries – demand appears strong enough to keep pressure on supply, “creating a imbalance in the market that has persisted for a long time. more than most traders anticipated,” Richey says.
Nymex (CL1:COM) front-month crude oil for June delivery ended the week +1.9% at $83.85/bbl, and front-month June Brent crude (CO1:COM) sold off +2.5% to $89.50 a barrel, breaking a two-week losing streak for both benchmarks.
Additionally, US natural gas fell for the third consecutive week, as the May 1 Nymex contract (NG1:COM) ended. -7.8% at $1,614/MMBtu.
ETF: (NYSEARCA:USE), (BNO), (UCO), (SCO), (USL), (BOD), (DRIP), (GUSH), (NRGU), (USOI), (UNG), (BOIL), (COLD), (UNL), (FCG)
in a bearish view of crude oilCiti analysts said this week that the market's focus has shifted toward increasingly bearish near-term fundamentals, noting that increases in global oil inventory of nearly 1 million barrels/day in the first quarter are extending through April, while better-than-expected oil demand anticipated earlier this year is starting to pick up. moderate.
Citi said the current time of year should see a “decent growth trend” in gasoline demand, but noted that demand in the week ending most recently, excluding the pandemic years, was the highest April reading. down since 2014.
The bank said it expects Brent oil prices to average $86 a barrel in the second quarter, with “easing fundamentals” eventually putting downward pressure on prices.
Citi also downplayed any impact of tougher U.S. sanctions on Iran or Venezuela, believing the Biden administration will not want to tighten the oil market in a presidential election year.
The energy sector, as indicated by the Energy Select Sector SPDR ETF (NYSERCA:XLE), finished +0.1%.
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Top 5 declines in energy and natural resources in the last 5 days: Eco Wave Power (WAVE) -33.1%International of Petroleum States (OIS) -22.5%Mesa Royalty Trust (MRT) -16.7%Sasol (SSL) -15.5%Nine Energy Services (NINE) -fifteen%.
Source: Barchart.com
