Oil Set for Fourth Weekly Gain
(Bloomberg) -- Oil headed for a fourth weekly gain, the best run since early July, supported by signs of a tighter market and positive pricing patterns.
West Texas Intermediate, which edged lower on Friday, has climbed almost 4% this week. The U.S. benchmark has advanced as crude and gasoline stockpiles in the country registered further declines. Investors have also been tracking strong rallies in other energy commodities, especially natural gas, which has surged by about 45% so far this quarter.
Crude markets are backwardated, a bullish pattern that’s marked by more costly near-dated prices than those further out. The spread between WTI’s nearest two December contracts has risen 32% this week to more than $6 a barrel. That suggests investors are more optimistic about the outlook.
Oil has surged this month as global consumption continues to recover from the pandemic, eroding inventories. Extreme weather in the U.S. has also hobbled production, offsetting for now the impact of additional barrels from the Organization of Petroleum Exporting Countries and its allies. The market should remain tight through year-end, according to Commerzbank AG.
“Oil had a good run mainly due to supply issues, with U.S. production still not recovering fully after the hurricane and crude inventories drawing much more than expected,” said Kwangrae Kim, a senior commodities analyst at Samsung Futures Inc., referring to the upheaval caused by Hurricane Ida.
Rising crude prices have helped to support gasoline, spurring another round of pushback from the White House. In his latest attempt to counter inflationary pressures, President Joe Biden said his administration is looking into the issue. “There’s lots of evidence that gas prices should be going down -- but they haven’t,” Biden said on Thursday. “We’re taking a close look at that.”
© 2021 Bloomberg L.P.
What do you think? We’d love to hear from you, join the conversation on the
Rigzone Energy Network.
The Rigzone Energy Network is a new social experience created for you and all energy professionals to Speak Up about our industry, share knowledge, connect with peers and industry insiders and engage in a professional community that will empower your career in energy.