Oil Heads for Longest Weekly Rally Since 2016
(Bloomberg) -- Oil headed for its longest weekly winning streak since 2016 as supply disruptions in Libya and Venezuela persist at a time when the OPEC+ coalition is showing record compliance with its pledged output cuts.
Futures in New York rose 0.4 percent Friday and are up 1.2 percent this week. Libyan warlord Khalifa Haftar has moved his forces to the gates of Tripoli when he was supposed to be preparing for an international peace conference aimed at ending eight years of turmoil. Meanwhile, OPEC said its output plunged in March as its planned cutbacks were amplified by the crisis in Venezuela, and pointed to a much tighter market in coming months.
Crude prices have rallied more than 40 percent this year as the Organization of the Petroleum Exporting Countries and its partners including Russia adhered to planned output reductions, which have been compounded by production losses in members Venezuela, Iran and Libya. While supplies are tightening for now, the International Energy Agency said it could lower its demand forecasts because of lingering threats to the global economy.
“The market’s paying close attention to the lingering supply risks in Libya, Venezuela and Iran as they are holding oil’s rally at the moment,” Sungchil Will Yun, a commodities analyst at HI Investment & Futures Corp., said by phone in Seoul. “In order for crude to edge higher, the market needs assurance that the global economy is healthy.”
West Texas Intermediate for May delivery added 26 cents, or 0.4 percent, to $63.84 a barrel on the New York Mercantile Exchange as of 7:51 a.m. in London. Prices are set for a sixth weekly advance, after closing 1.6 percent lower at $63.58 on Thursday, the biggest loss since March 1.
Brent for June settlement rose 19 cents to $71.02 a barrel on the London-based ICE Futures Europe exchange. Prices are up 1 percent since April 5, heading for a third straight weekly advance. They lost 1.3 percent to settle at $70.83 on Thursday. The global benchmark crude was at a premium of $7.14 to WTI for the same month.
The prospect of violence in Libya could further squeeze oil flows from the OPEC member, which has been in disarray since Moammar Al Qaddafi was removed from office and killed in 2011. While that risk and a fall in Venezuelan output thanks to U.S. sanctions is helping oil stay near a five-month high, prices are struggling to rise further due to uncertainty over the future of the OPEC+ deal, American inventories and the global economy.
U.S. stockpiles are at the highest level since late 2017, and Russian President Vladimir Putin signaled this week that the nation is keeping its options open on whether to continue curbing oil production with OPEC beyond June.
The political situation in Libya, Iran and Venezuela will need to be considered before deciding on whether to continue with the cuts, Putin said. His comments came after Saudi Arabia announced it doesn’t plan to deepen its curbs. OPEC’s monthly report showed the group’s output is about 758,000 barrels a day below the average it believes is needed during the second quarter.
An uncertain outlook for the global economy -- aggravated by risks including the U.S.-China trade war and the potential for a disruptive British exit from the European Union -- are also unnerving investors. The International Monetary Fund predicted this week that global growth this year will be the weakest in a decade.
--With assistance from James Thornhill.To contact the reporter on this story: Heesu Lee in Seoul at firstname.lastname@example.org To contact the editors responsible for this story: Pratish Narayanan at email@example.com Ovais Subhani, Andrew Janes
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