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Barani Krishnan
Apr 06, 2023 3:25PM ET
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Oil steady, notches 3rd weekly gain after shock OPEC+ cuts
Published Apr 05, 2023 07:13PM ET
Updated Apr 06, 2023 03:16PM ET
© Reuters. FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford
By Arathy Somasekhar
HOUSTON (Reuters) -Oil prices were little changed on Thursday but posted a third weekly gain as markets weighed further production cuts targeted by OPEC+ and falling U.S. oil inventories against fears about the global economic outlook.
Brent crude settled up 13 cents, or 0.2%, at $85.12 a barrel. West Texas Intermediate U.S. crude closed 9 cents, or 0.1%, higher at $80.70. There will be no trading on the Good Friday holiday.
Both benchmarks jumped more than 6% this week after OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, surprised the market on Sunday with a pledge of production cuts.
Hedge funds have bought crude all week, moving from the sidelines back into "risk on" mode, said Dennis Kissler, senior vice president of trading at BOK Financial.
Prices drew support from a steeper-than-expected drop and a second consecutive weekly drawdown in U.S. crude inventories last week. Gasoline and distillate inventories also declined, hinting at rising demand. [EIA/S]
U.S. energy firms this week also cut the number of oil rigs for a second week in a row. The rig count, an early indicator of future output, dropped two to 590 this week, Baker Hughes data showed. [RIG/U]
Limiting gains, however, U.S. labor market data pointed to slowing economic growth, and there was also slower-than-expected growth in the U.S. services sector.
"Demand destruction as function of the threat of recession is greater than the cut by OPEC+," said Robert Yawger, said director of energy futures at Mizuho Securities.
Buyers of put options that hedge downside risk were more active than buyers of call options, which bets on rising prices, implying traders were worried prices could fall, Yawger added.
"The oil market's bullish momentum may have paused, but upside potential remains given the tightening supply backdrop," said Stephen Brennock of oil broker PVM.
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Comments (4)
Stephen Fa
Apr 06, 2023 1:11PM ET
US rig count down again this week. Wells permitted during prior presidential administration are drying up.
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Brad Albright
Apr 06, 2023 1:11PM ET
Good thing Biden's just opened up Willow in Alaska and all those new permits in the Gulf of Mexico (drying up wells -- lol. Your allegiance to political propaganda makes you sound like a moron.)
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ThAnOs
Apr 05, 2023 9:25PM ET
If Saudi continues to cut ,USA will attack one more land with big oil storage everything in the name of their democracy
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Barani Krishnan
Apr 05, 2023 7:51PM ET
"On a support side, Saudi Arabia, the world's top oil exporter, has raised the prices of its flagship crude for Asian buyers for the third straight month. "This points to further strength in demand in the region," ANZ Research added. (What a load of fertilizer ... Saudis raising prices because of demand. What Asian demand??)
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Luke Knoep
Apr 05, 2023 7:51PM ET
Barani Krishnan OPEC isnt stupid. They know theyll lose more money if they jack up prices with not as much demand. If there wasn’t as much demand prices would stay the same.
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Barani Krishnan
Apr 05, 2023 7:51PM ET
Luke Knoep Oh trust me, there's been a lot of stupidity on OPEC's side; history will show that. Holding the world to ransom on the supply of a critical commodity you are in control of is a no-brainer for sure. Yet, the economy is the ultimate decider of everything. For the record, the Salman brothers had an abysmal performance in trying to jack up crude prices until end of 2019 (just go back and check). But the pandemic -- and resulting supply disruptions -- were a gift to them. That ma(dman) called Putin and his invasion of Ukraine was another. Otherwise, crude would not go above $60 to $70.
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Barani Krishnan
Apr 05, 2023 7:51PM ET
Luke Knoep I'll put it down to greed and a MbS bent to show the finger to America, especially after being defamed over Khashoggi.
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Chris Gonzales
Apr 05, 2023 7:51PM ET
true words spoken
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Barani Krishnan
Apr 05, 2023 7:51PM ET
Chris Gonzales Thank you.
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