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Oil prices slipped Friday but are clinging to weekly gains and will end November with an advance, as the possible approval of a production cut extension at next week’s OPEC meeting and cautious optimism for a U.S.-China trade pact have underpinned bullish sentiment in the energy markets.
Market conditions were thin as U.S. markets were closed Thursday for the Thanksgiving holiday and will shutter early, at 1:30 p.m. Eastern, on Friday.
West Texas Intermediate crude futures for January delivery CLF20, -0.12% fell 9 cents, or 0.1%, at $58.02 a barrel on the New York Mercantile Exchange. The contract is up about 0.5% for the week and up 6.9% for November.
January Brent crude BRNF20, -0.70%, the global marker, fell 64 cents, or 1%, at $63.42 a barrel on ICE Futures Europe. It trades just in positive territory for this week and is headed for a roughly 6.4% November gain. January Brent will expire at Friday’s close.
Oil prices had been at their highest levels since late September as traders looked ahead to the Dec. 5-6 gathering of the Organization of Oil Exporting Countries and its closest allies, including major producer Russia.
A combination of improved OPEC compliance with existing production curbs, expectations for an extension of output cuts from the group beyond March 2020, at least according to some analysts, and slowing U.S. production growth have all added up to the bullish picture.
Read: Here are the biggest risks to OPEC+ efforts to balance oil
Global trade issues and their likely impact on oil consumption remain a driver. Tentative progress had helped push U.S. stock markets to fresh records, lifting risk markets all around, including most commodities.
But the U.S. move by President Trump to sign into law the Human Rights and Democracy Act in favor of Hong Kong and against mainland authorities was “not exactly well received by China and… set to somewhat further complicate the anyway delicate trade negotiation,” analysts at JBC Energy said in a note.
Oil prices slipped Wednesday after official U.S. inventory data posted an unexpected rise in the latest week but remained near their highest levels in about eight weeks.
Crude inventories rose by 1.6 million barrels in the week ended Nov. 22. The last outright drawdown in the official data was in mid-October.
The futures market showed little reaction Wednesday to the early release from Baker Hughes BKR, -0.27% of weekly rig count data. The U.S. count was down one rig from last week to 802, with oil rigs down three to 668, gas rigs up two to 131, and miscellaneous rigs unchanged at three. The U.S. rig count is down 274 rigs from last year’s count of 1,076, with oil rigs down 219, gas rigs down 58, and miscellaneous rigs up 3 to 3. The report is usually released on Friday.
“A period of consolidation has set in for WTI. However, this is a consolidation that the bulls will not necessarily mind,” said Richard Perry, analyst with Hantec Markets.
“Having broken to an eight-week high last week, WTI is now settling and has spent the past few sessions using old resistance levels as a basis of support,” said Perry, who sees the next upside challenges in play at $58.65, and then at $60.45.
In other energy trading Friday, December gasoline RBZ19, +0.10% was up 0.1% at $1.6806 a gallon, while December heating oil HOZ19, -0.21% fell 0.3% to $1.9415 a gallon. Both contracts will expire at settlement.
January natural-gas futures US:NGZ19 traded down 2.6% to $2.434 per million British thermal units, having fallen for three sessions in a row through Wednesday. The market has been in retreat amid a forecast for milder weather for the period after Thanksgiving. For November so far, the contract is down just over 5%.
Read: Why winter weather hasn’t fueled a big rally in natural gas
