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Oil futures rose Friday, on track for solid weekly gains attributed in large part to Saudi Arabia’s decision to unilaterally slash crude output.
“The headline item this week was the announcement by Saudi Arabia” that the country would cut an additional one million barrels per day from its output, or more than 1% of global supply for the month of February, said Robbie Fraser, manager of global research & analytics at Schneider Electric, in daily note.
“The move is likely to keep supply/demand balances tight, and also helps to lock in continued OPEC+ action as some members have shown hesitance to extend record cuts into and beyond Q1,” he said.
“Looking ahead, OPEC+ action will continue to be in focus as the group balances the need to support prices with concerns around lost market share and restricted income from exports.”
West Texas Intermediate crude for February delivery CL.1, +1.53% CLG21, +1.53% rose 80 cents, or 1.6%, to $51.63 a barrel on the New York Mercantile Exchange. March Brent crude BRNH21, +1.86%, the global benchmark, was up $1.09, or 2%, at $55.47 a barrel on ICE Futures Europe.
For the week, U.S. benchmark WTI crude was up 6.5%, while Brent crude was looking at a rise of more than 7%. The gain would mark a ninth straight weekly increase out of the last 10 weeks.
Saudi Arabia on Tuesday took traders off guard by announcing it would cut output by 1 million barrels a day in February and March. The move came after a protracted meeting of OPEC+ — made up of the Organization of the Petroleum Exporting Countries and a Russian-led alliance of non-OPEC producers — that saw the group agree to largely stick to its existing output curbs, while allowing Russia and Kazakhstan to boost output by a combined 75,000 barrels a day.
In the U.S., oil prices are “now at a level that could attract some new production interest, though producers are likely to proceed with caution,” said Fraser. “For demand, while levels have steadily rebounded since the first half of 2020, a weak jobs report for December could signal further challenges ahead.”
The U.S. lost jobs in December for the first time in eight months as the coronavirus bore down on the economy again. The government and private sector shed 140,000 jobs last month, the Bureau of Labor Statistics said Friday.
The U.S. saw at least 4,111 deaths on Thursday from COVID-19, the most in a single day since the start of the outbreak, according to a New York Times tracker, and counted a record of at least 280,028 new cases, also a record. In the last week, the U.S. has averaged 237,607 cases a day, after experts warned that infections could accelerate if Americans traveled in large numbers during the recent holiday season.
Back on Nymex, petroleum producers also looked to notch gains for the session, as well as the week. February gasoline RBG21, +2.45% added 2.7% to $1.5232 a gallon, trading up around 8% from the week ago finish. February heating oil HOG21, +1.79% tacked on 1.8% to $1.5665 a gallon, poised for a weekly climb of 5.6%.
February natural gas NGG21, -2.02% traded at $2.70 per million British thermal units, down 1.1% in Friday dealings, but set for a weekly climb of 6.3%.
