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Crude oil futures rose for a fourth straight session Friday and notched their first weekly gain in five weeks, supported by tightening inventories, particularly in the U.S., and the underlying risk premium around tensions in the Middle East.
Analysts said the drop in first-time weekly U.S. jobless claims reported early Thursday helped set a reassuring tone for investors who had been worried about the state of the labor market.
Oil also received support from China’s consumer price index, which rose last month at a slightly faster than expected rate.
“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,” according to ActivTrades analyst Pierre Veyret, Reuters reported.
“The price per barrel has benefited from rising geopolitical tensions in the Middle East, which have fueled fears of a potential conflict that could disrupt the region’s output and reduce the global supply of crude,” Veyret added.
Front-month Nymex crude (CL1:COM) for September delivery ended the week +4.5% to $76.84/bbl, including Friday’s 0.8% gain, and front-month October Brent crude (CO1:COM) closed +3.7% to $79.66/bbl this week, including a 0.6% advance on Friday.
Front-month Nymex natural gas (NG1:COM) for September delivery +8.9% to $2.143/MMBtu this week, posting its first weekly rise in four weeks, including Friday’s 0.7% gain.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG)
Executives at U.S. refiners said this week they are reducing production this quarter, as profit margins remain weak and companies plan more maintenance downtime with summer fuel demand ebbing.
Refiners ran at an industry average 95% of capacity earlier this year, leading to plentiful gasoline stocks that benefited motorists but hurt profits, so “the hope is if you lower supply you may get higher margins,” Tudor Pickering Holt analyst Matthew Blair told Reuters this week.
Marathon Petroleum (MPC) said this week it expects to operate its 13 refineries at 90% of their combined crude intake capacity of 3M bbl/day in Q3, down from 97% in Q2, Valero Energy (VLO) will reduce its processing rate due to ~2.86M bbl/day vs. 3M bbl/day last quarter, and Phillips 66 (PSX) plans to run its plants in the low-90% of capacity after running at a five-year high of 98% of capacity in Q2.
Energy (NYSEARCA:XLE), as represented by the Energy Select Sector SPDR Fund ETF, was the week’s second best stock market performer, +1.1%.
Top 10 gainers in energy and natural resources in the past 5 days: Indonesia Energy (INDO) +41.5%, Eco Wave Power (WAVE) +24.1%, Pampa Energia (PAM) +19.3%, Transportadora de Gas (TGS) +18.8%, Comstock Resources (CRK) +17.9%, Euroseas (ESEA) +16%, Calumet Specialty Products (CLMT) +15.2%, NRG Energy (NRG) +14.7%, Vista Energy (VIST) +14.2%, Seanergy Maritime (SHIP) +13.8%.
Top 5 decliners in energy and natural resources in the past 5 days: NextDecade (NEXT) -40.1%, ProFrac Holding (ACDC) -25.4%, Montauk Renewables (MNTK) -24.6%, New Fortress Energy (NFE) -24.1%, Green Plains (GPRE) -22.4%.
Source: Barchart.com
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