Commodities
Oil posts 3% weekly gains on positive economic data, rate cut hopes
By Arathy Somasekhar
HOUSTON (Reuters) -Oil prices settled higher on Friday and notched over 3.5% in weekly gains as positive economic data and signals from Fed policymakers that they could cut interest rates as early as September eased demand concerns, while fears of a widening Middle East conflict continue to raise supply risks.
futures settled 50 cents up, or 0.6%, at $79.66 a barrel, while U.S. West Texas Intermediate crude futures rose 65 cents, or 0.9%, to $76.84. both benchmarks.
Brent gained more than 3.5% in the week, while WTI rose more than 4%.
“Crude is in a recovery mode … as geopolitical tensions still seem to be a positive factor, and on-again off-again recession fears have calmed a bit, at least for now,” said Dennis Kissler, senior vice president of trading at BOK Financial.
A trio of Federal Reserve policymakers indicated on Thursday that they were more confident that inflation is cooling enough to cut rates. A bigger-than-expected fall in U.S. jobless claims data also helped to underpin the recovery.
The number of Americans filing new applications for unemployment benefits fell more than expected last week, suggesting that fears the labor market is unraveling were overblown and that the gradual softening in the labor market remains intact.
Also offering support was China’s consumer price index, which rose last month at a slightly faster than expected rate, statistics bureau data showed.
“Positive momentum was further reinforced by Chinese inflation numbers that exceeded expectations. In this context, it wouldn’t be surprising to see the price per barrel testing the $80 level,” said Pierre Veyret, Technical Analyst at ActivTrades.
“The price per barrel has benefited from rising geopolitical tensions in the Middle East, which have fuelled fears of a potential conflict that could disrupt the region’s output and reduce the global supply of crude,” Veyret added.
Israeli forces stepped up airstrikes across the Gaza Strip on Thursday, killing at least 40 people, Palestinian medics said, in further battles with Hamas-led militants.
The killing last week of senior members of militant groups Hamas and Hezbollah had raised the possibility of retaliatory strikes by Iran against Israel, stoking concerns over oil supply from the world’s largest producing region.
Iran-aligned Houthi militants have also continued attacks on international shipping near Yemen in solidarity with Palestinians in the war between Israel and Hamas.
Leaders of the United States, Egypt and Qatar on Thursday called on Israel and Hamas to meet for negotiations on Aug. 15 in order to finalize a Gaza ceasefire and hostage release deal.
The Russia-Ukraine conflict also continued as Moscow moved extra tanks, artillery and rocket systems to its southern Kursk region on Friday as it battled for the fourth straight day to end a shock incursion by Ukrainian forces.
Meanwhile, the , which measures the currency against six others, was down 0.136% at 103.14 following three days of gains. A weaker greenback helps demand as oil becomes cheaper for foreign buyers.
Lending further support to prices, Libya’s National Oil Corp declared force majeure at its Sharara oilfield from Wednesday, adding that it had gradually reduced the field’s output because of protests.
However, U.S. oil rigs, an indicator of future production, rose by three to 485 this week.
Money managers cut their net long futures and options positions in the week to August 6, the U.S. Commodity Futures Trading Commission (CFTC) said.
By Robert Harvey
LONDON (Reuters) -Oil futures jumped by almost 1% on Monday as a potential hurricane approaching the U.S. Gulf Coast helped oil prices to recover some of the previous week’s heavy losses.
rose 58 cents, or 0.82%, to $71.64 a barrel by 1125 GMT while West Texas Intermediate crude futures were up 61 cents, or 0.9%, at $68.28.
Prices of Brent crude had fallen in each of the past six trading sessions, retreating by more than 11%, or nearly $9 a barrel, to register the lowest closing price since December 2021 on Friday.
Analysts said Monday’s rebound was partly in response to a potential hurricane near the U.S. Gulf Coast while Libyan supply disruption has also been supporting prices.
Libya’s NOC late last week declared force majeure on several crude cargoes loading from the Es Sider port, with oil production curtailed by a political standoff over the central bank and oil revenue, four trading sources with knowledge of the matter told Reuters.
A weather system in the southwestern Gulf of Mexico is forecast to become a hurricane before it reaches the northwestern U.S. Gulf Coast, the U.S. National Hurricane Center said on Sunday. The U.S. Gulf Coast accounts for about 60% of U.S. refining capacity.
“A small recovery in prices is under way this morning, inspired by hurricane warnings that might threaten the U.S. Gulf Coast, but the wider conversation remains on where demand will come from and what OPEC+ can do,” said PVM analyst John Evans.
The OPEC+ oil producer group last week agreed to delay a planned output increase of 180,000 barrels per day for October by two months in reaction to tumbling crude prices
Trading houses Gunvor and Trafigura expect oil prices to range between $60 and $70 a barrel because of sluggish Chinese demand and persistent oversupply, executives told the APPEC conference in Singapore on Monday.
Meanwhile, Morgan Stanley cut its Brent price forecast for the fourth quarter to $75 a barrel from $80, adding that prices are likely to remain around that level unless demand weakens further.
The weakness in Chinese demand is driven by an economic slowdown and growing shift towards lower-carbon fuels, said speakers at the APPEC energy industry event.
Refining margins in Asia have slipped to their lowest seasonal levels since 2020.
A U.S. jobs report on Friday showed that August non-farm payrolls increased by less than market watchers had expected.
A decline in the jobless rate could slow the pace at which the Federal Reserve cuts interest rates, analysts said. Lower interest rates typically increase oil demand by spurring economic growth.
(Reuters) – Goldman Sachs adjusted its expectations for OPEC+ oil production saying it now expects three months of production increases starting from December instead of October, the bank said in a note on Friday.
OPEC+ has agreed to delay a planned oil output increase for October and November, the producers group said on Thursday after crude prices hit their lowest in nine months, adding it could further pause or reverse the hikes if needed.
However Goldman Sachs maintained its range of $70-85 per barrel and a December 2025 Brent forecast at $74 per barrel.
The investment bank expects the effects of a modest reduction in OPEC+ supply in the upcoming months to be counterbalanced by easing effects from the current softness in China’s demand and faster-than-expected recovery of Libya’s supply.
“We still see the risks to our $70-85 range as skewed to the downside given high spare capacity, and downside risks to demand from weakness in China and potential trade tensions,” Goldman Sachs said.
Brent crude futures were down $1.63, or 2.24%, to $71.06 a barrel on Friday, their lowest level since December 2021. U.S. West Texas Intermediate crude futures fell $1.48 on Friday, or 2.14%, to $67.67, their lowest since June 2023. [O/R]
Investing.com — Oil prices settled lower Friday, ending the week with a loss as weaker U.S. nonfarm payrolls stoked concerns about an economic-led slowdown in crude demand.
At 2:30 p.m. ET (1430 GMT), the futures (WTI) traded fell 2.1% to settle at $67.67 a barrel, while contract fell 2.2% to $71.06 per barrel.
U.S. economic slowdown worries resurface after weak jobs report
The US economy added fewer jobs than anticipated in August, but rose from a sharply revised July figure, according to Labor Department data that could factor into the Federal Reserve’s next policy decisions.
Nonfarm payrolls came in at 142,000 last month, up from a downwardly-revised mark of 89,000 in July. Economists had called for a reading of 164,000, up from the initial July mark of 114,000.
Following the release, bets that the Fed will introduce a deeper 50 basis-point rate cut — rather than a shallower 25 basis-point reduction — increased.
Concerns about the demand come just a day after OPEC+ said it had agreed to postpone a planned increase in oil production for October and November.
U.S., Europe working on Iran sanctions
Geopolitical tensions ratcheted up on Friday after the U.S. and Europe they were working on sanctions to impose on Iran after the Tehran sent missiles to Russia.
The U.S. had previously warned Iran about transferring missiles to Russia, saying it would represent a major escalation in Iran’s support of Russia’s war against Ukraine.
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