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Oil futures climbed on Friday, with prices for U.S. and global benchmark crude on track to tally their first weekly gain in a month, as traders continued to monitor U.S. debt-ceiling talks as well as prospects for demand from China.
Natural-gas futures, meanwhile, traded more than 16% higher for the week, with analysts attributing the sharp rise to a smaller-than-expected weekly rise in U.S. supplies and signs of a slowdown in domestic production.
Price action
-
West Texas Intermediate crude for June delivery
CL00,
-0.17% CLM23,
-0.25%
gained 33 cents, or 0.5%, to $72.19 per barrel on the New York Mercantile Exchange, with prices for the front-month contract trading up more than 3% for the week, FactSet data show. -
July Brent crude
BRN00,
-0.01% BRNN23,
-0.01% ,
the global benchmark, gained 55 cents, or 0.7%, to $76.41 per barrel on ICE Futures Europe, eying a weekly climb of 3%. -
Back on Nymex, June gasoline
RBM23,
+0.03%
rose by 0.2% to $2.5745 per gallon, while June heating oil
HOM23,
-0.55%
traded at $2.4133 a gallon, up nearly 0.5%. -
June natural gas
NGM23,
+2.24%
tacked on 2.1% to $2.647 per million British thermal units, with prices trading more than 16% higher than the week-ago settlement.
Market drivers
“Oil benchmarks enjoyed a risk-on lift this week from optimism that the U.S. will indeed avoid a default,” Han Tan, chief market analyst at Exinity Group, told MarketWatch Friday. That has set WTI up for its first weekly gain since mid-April.
Still, “oil bulls still have much to do to restore WTI back to the $80 [a barrel] handle, with prices still weighed down by persistent demand-side fears,” said Tan. “Oil’s upside is likely to remain capped until markets can put to bed the angst surrounding the looming recession, especially if the Chinese economy can offer evidence of a broader and more resilient recovery.”
U.S. debt-ceiling negotiations in Congress have also been in focus as traders wait to see how the impasse will be resolved.
Debt-ceiling discussions have “progressed in the right direction,” StoneX’s Kansas City energy team, led by Alex Hodes, wrote in Friday’s newsletter.
“Investors have seemed shy of this market with the risk of both the U.S. debt default and the Federal Reserve adding higher probability of another round of interest rate hikes,” they said.
Dallas Federal Reserve Bank President Lorie Logan said Thursday that she’s concerned about whether inflation is falling fast enough and that the economic data don’t yet support a pause in interest-rate hikes.
Troy Vincent, senior market analyst at DTN, told MarketWatch that crude price action this week was somewhat muted, “despite wildfires in Canada shutting production and Kurdish oil exports from Turkey still stranded amid pipeline disputes.”
Read: Turkey’s runoff presidential election further complicates the restart of a key oil pipeline
That “speaks to the broader worries about the outlook for demand as we work into the second half of the year,” Vincent said.
Meanwhile, natural-gas prices continued higher after settling Thursday with a gain of nearly 10%, contributing to a more than 16% rise for the week.
The Energy Information Administration on Thursday reported a smaller-than-expected increase of 99 billion cubic feet in natural-gas inventories for the week ending May 12.
That “kicked off the move higher” as the market was looking for an injection somewhere around 108 billion cubic feet, StoneX’s Kansas City energy team said.
“However, the situation with the wildfires in Alberta is still precarious,” they said. “Gas flows, in addition to oil flows, out of this main producing region and into the U.S. have slowed, according to a Reuters report.”
