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Oil futures rose Friday, on track for strong weekly gains after tapping 2023 highs, as tightening supplies outweighed worries about demand from China and the global economy.
Price action
-
West Texas Intermediate crude for October delivery
CL00,
+0.79% CLV23,
+0.79%
rose 84 cents, or 1%, to $87.71 a barrel on the New York Mercantile Exchange, on track for a 2.5% weekly gain, FactSet data show. -
November Brent crude
BRN00,
+0.85% BRNX23,
+0.85% ,
the global benchmark, was up 80 cents, or 0.9%, at $90.72 a barrel on ICE Futures Europe, headed for a 2.5% advance on the week. -
October gasoline
RBV23,
+1.43%
tacked on 1.4% to $2.6597 a gallon and October heating oil
HOV23,
+2.90%
climbed 3.2% to $3.316 a gallon. -
Natural gas for October delivery
NGV23,
+1.36%
traded at $2.633 per million British thermal units, up 2.1% for the session, but trading nearly 5% lower for the week.
Market drivers
WTI on Thursday snapped a nine-day winning streak, while Brent ended a seven-session run of gains. Both grades ended Wednesday at their highest since 2023.
Read: Oil trades at 2023 highs. Are U.S. prices headed for $100?
The oil market’s focus has “shifted to the tight supply situation given the extensions to output curbs announced by Saudi Arabia and Russia over the course of the last week,” analysts at Sevens Report Research wrote on Friday’s newsletter. “The focus is no longer the simmering risks to demand associated with recession.”
They believe the path of least resistance is “higher for oil based on tight physical market fundamentals and the technical breakout to fresh 2023 highs.”
Gains this week came after Saudi Arabia announced it would extend a production cut of 1 million barrels a day, which took effect in July, through the end of the year, while Russia said it would also extend supply cuts.
Monthly reports from the International Energy Agency, the Organization of the Petroleum Exporting Countries and the U.S. Energy Information Administration will be closely watched next week, said Barbara Lambrecht, commodity analyst at Commerzbank, in a Friday note.
“Until now, the International Energy Agency has presumably been assuming that the voluntary cuts would be gradually withdrawn from October and that global supply would fall 1.3 million barrels per day short of demand in the fourth quarter. At just shy of 2 million barrels per day, the deficit is now likely to be almost as high as in the current quarter,” she wrote. “This should lend good support to prices, as industrial stocks will consequently fall further behind the five-year average in the coming months.”
OPEC will release its monthly oil report on Tuesday, while the EIA’s oil report comes out Wednesday.
