Oil Prices Up for the Week

West Texas Intermediate (WTI) and Brent crude oil futures eked out gains for the day and the week.

The September WTI contract gained 18 cents Friday, settling at $56.20 per barrel. The light crude marker traded within a range from $55.68 to $56.57. Compared to the July 19 close, the WTI is up one percent.

Also edging upward Friday was the September Brent price, which picked up seven cents to settle at $63.46 per barrel. The Brent is up 1.6 percent week-on-week.

Both grades of crudes managed to show slight gains for the week despite trading within a wide range Wednesday, said Tom Seng, Assistant Professor of Energy Business with the University of Tulsa’s Collins College of Business.

“Monday’s higher prices were the result of last Friday’s seizure of a British-flagged oil tanker in the Persian Gulf,” said Seng. “Countering that move was a sense of adequate flowing oil supplies and building global inventories and sagging demand going forward.”

Seng also noted the International Energy Agency (IEA), OPEC and the U.S. Energy Information Administration (EIA) all lowered their growth forecasts for the remainder of 2019. In addition, he pointed out the American Petroleum Institute (API) reported that U.S. crude exports have hit a record daily average of 3.3 million barrels – helping to offset global supply interruptions from places such as Iran and Venezuela.

“It has also been reported that China is stockpiling millions of barrels of Iranian crude at its ports,” said Seng. “Since it is not officially being received as imported crude, so-called bonded crude is not currently being counted but could serve to dampen prices when the world’s largest importer of oil takes ownership.”

The EIA’s latest Weekly Petroleum Status Report showed a fifth straight weekly decline in U.S. commercial crude inventories, said Seng. In addition, he pointed out the report revealed:

• A drop in commercial crude stocks of 10.8 million barrels (Bbl), far higher than the 4.1 million Bbl projected by Wall Street Journal analysts with close to API’s forecast of 11 million Bbl
• 445 million Bbl of total crude in storage – two percent higher than the five-year average for this time of year
• A 429,000-Bbl decline in oil stocks at the Cushing, Okla., hub, bringing the total down to 50.4 million Bbl – or 66 percent of capacity
• 93.1 percent refinery utilization, or 17 million Bbl per day (bpd) – a 1.3-percent decline from the previous week
• A 14-percent year-on-year drop in oil imports
• U.S. oil production at 11.3 million bpd, down from the preceding week

“On the economic front, the U.S. stock market appears poised for a loss on the week despite a mid-week rally,” said Seng, adding that Second Quarter 2019 GDP growth – though down – was not as slow as expected, thanks to higher consumer spending. “Still, the three-percent growth target of the Trump administration does not seem possible this year.”

Seng added the U.S. dollar inched higher throughout the week, undercutting any bullish signals.

“Technically, the September WTI NYMEX futures contract is trading right around its five- and 10-day moving averages but remains below its 20-day moving average,” he said. “Price levels are now back to those of late-May. The contract is near neutral in oversold/overbought conditions, according to momentum indicators. The WTI/Brent spread now stands at about $7.30.”

Reformulated gasoline (RBOB) for August delivery lost less than one cent during Friday’s trading, settling at $1.87 per gallon. For the week, however, RBOB is up 1.6 percent. Seng observed that U.S. total gasoline inventories stand at 223.5 million Bbl, below the year-ago level but still higher than the five-year average for this time of year.

“However, retail prices are eight cents per gallon lower than last year while NYMEX futures prices are about 23 cents per gallon less,” he said.

The August Henry Hub natural gas futures price fell 7.5 cents to end the day at $2.17. Week-on-week, the gas contract is down 3.6 percent.