Oil manages to escape weeks-long streak of losses with slight gains
Business
Friday saw an over $1 a barrel tumble initially before Brent, WTI recovered most of the lost ground
NEW YORK/HOUSTON (Web Desk/Reuters) – Oil prices managed to end a weeks-long series of losses with a slight gain for the week ending Friday as Brent futures settled at $76.55 per barrel and US West Texas Intermediate (WTI) crude at $71.43.
The corresponding closing prices for the two benchmarks last week [December 9] were $75.84 and $71.23 respectively.
However, Brent and US crude futures finished at a small loss following a see-saw session on Friday, in which prices fell more than $1 a barrel at one point, as traders tried to reconcile mixed signals for oil demand in the coming year.
Brent futures settled down 6 cents, or 0.08 per cent while US WT) crude finished down 15 cents, or 0.21pc.
The market tumbled earlier in the session after a New York Federal Reserve Bank manufacturing survey showed a third month of declines in new orders, which could be a sign of weaker demand for oil in the coming year.
"What started the selloff was the sharp drop in the New York manufacturing numbers," said Phil Flynn, analyst at Price Futures Group.
"This market seems a little more sensitive to every new headline," Flynn added. "They're still not sure we've found the bottom to this market."
Traders were also shaken by comments from New York Federal Reserve Bank President John Williams on Friday about hopes for interest rate cuts in the coming year.
"We aren't really talking about rate cuts right now," Williams said in an interview with CNBC. When it comes to the question of lowering rates, "I just think it's just premature to be even thinking about that" at this point, he said.
On Thursday, Federal Reserve Chairman Jerome Powell said interest rate hikes intended to curb inflation were likely at an end, but left open the possibility for further increases.
The dollar fell to a four-month low on Thursday after the US central bank after Powell's comments, seeing signs lower borrowing costs are coming in 2024. The dollar index was broadly steady on Friday.
A weaker dollar makes dollar-denominated oil cheaper for foreign buyers.
World oil consumption will rise by 1.1 million barrels per day (bpd) in 2024, the IEA said in a monthly report.
While that is a 130,000-bpd increase from its previous forecast, the estimate is less than half of the Organization of the Petroleum Exporting Countries' (OPEC) demand forecast of 2.25 million bpd.
OPEC and its allies led by Russia, in late November agreed on voluntary cuts of about 2.2 million bpd lasting throughout the first quarter.
"The markets in general and oil in particular are trying to sort out what's going on," said John Kilduff, partner with Again Capital LLC. "Everyone's trying to feel their way."
Money managers cut their net long US crude futures and options positions in the week to December 12, the US Commodity Futures Trading Commission (CFTC) said on Friday.
Another bullish signal for oil markets on Friday was the lower drilling rig count from energy technology firm Baker Hughes.
The oil and gas rig count, an early indicator of future output, fell by 3 to 623 in the week to Dec 15.
Baker Hughes said US oil rigs fell 2 to 501 this week, while gas rigs were unchanged at 119. That brings the rig count down from a post-pandemic high of 784 in December 2022 due to a drop in oil and gas prices.
