Oil Caps Best Week Since July as Demand Forecasts Improve
(Bloomberg) -- Oil had its biggest weekly gain since late July as Texas refineries recovering from Hurricane Harvey processed more crude and global demand forecasts brightened.
Futures rose 5.1 percent this week in New York, settling just below the $50-a-barrel threshold that’s kept the industry in thrall. The increase was buoyed by higher demand forecasts from the International Energy Agency and expectations OPEC and its partners will extend output cuts beyond the March expiration date of their deal.
“The narrative in the market is that demand has really picked up,” said John Kilduff, a partner at New York-based hedge Again Capital LLC. “As a result, we’ve gotten this push higher.”
Nearly a quarter of U.S. refining capacity was shuttered in the wake of Harvey. Two weeks later, only three Gulf Coast refineries remain shut, according to the Department of Energy. The rest -- including Motiva Enterprises LLC’s Port Arthur refinery, the nation’s largest -- are gradually coming back online, helping boost crude demand.
At the same time, the Paris-based IEA said on Wednesday it expects global demand to climb this year by the most since 2015 while the Organization of Petroleum Exporting Countries and its partners were said to be discussing an extension of its deal to cut output beyond its March expiration.
"People are looking for the price to go ahead and settle above $50 a barrel, but they need some more than just the current news," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone. "We need a couple good inventory reports or perhaps some bearish supply data from Libya or from the U.S. shale patch."
West Texas Intermediate futures for October delivery ended the session on the New York Mercantile Exchange at $49.89, unchanged from the highest close since July 31 on Thursday.
Brent for November settlement closed 15 cents higher at $55.62 a barrel on the London-based ICE Futures Europe exchange. Prices advanced 3.4 percent this week. The global benchmark crude traded at a premium of $5.18 to November WTI.
Meanwhile, the U.S. oil rig count fell for the fourth time in five weeks, according to Baker Hughes data released Friday. Rigs decreased by seven to 749. The decline included drops in Texas’ Permian and Eagle Ford shale basins.
“The feel-good factor appears to have returned to the oil market,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. “Underpinning the prevailing sentiment is the positive afterglow of this week’s frenzy of bullish oil demand forecasts from the leading energy agencies.”
Oil-market news:
The spread between Brent and WTI will narrow in coming weeks as U.S. refining capacity recovers from the disruption by Hurricane Harvey, according to Fitch’s BMI Research. Mexico’s drivers may pay more for fuel after a power failure hit a second refinery the same week that the strongest earthquake in more than a century shut the nation’s biggest plant.
With assistance from Melissa Cheok, Ben Sharples, Grant Smith and Nico Grant. To contact the reporter on this story: Meenal Vamburkar in New York at mvamburkar@bloomberg.net. To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net Carlos Caminada, Joe Carroll.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Gunvor CEO Sees Russian Refining Capacity Taking Hit from Drone Strikes
- These Factors Helped Brent Oil Price Break Above $85
- Sinopec Engineering Posts Higher Annual Petrochemicals Revenue
- Imperial Pipeline in Winnipeg Goes Offline for Three Months
- Gaz System to Acquire Gas Storage Poland
- Subsea7 Secures Contract to Service Woodside's Trion
- Adnoc Inks Supply Deal for Ruwais LNG Project with Germany's SEFE
- EIA Boosts USA Crude Oil Production Forecasts
- TotalEnergies to Acquire TLCS Eyeing Bayou Bend CCS Project
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Rystad Looks at the Buzz Around White Hydrogen
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension