Oil gains for the day Friday, falls for the week as Venezuelan unrest feeds global supply uncertainty
Myra P. Saefong / MarketWatch
Petroleumworld 01 25 2019
Oil futures ended higher Friday for a second straight session, supported by supply concerns tied to Venezuela, but a hefty weekly rise in U.S. crude supplies helped to keep prices lower for the week.
Market attention remained fixed on Venezuela, with all eyes on next steps for popular opposition leader Juan Guiado, while the top military brass reupped its allegiance to embattled President Nicolás Maduro .
Read: Here's what Venezuela turmoil means for oil prices
On Friday, West Texas Intermediate crude for March delivery US:CLG9 rose 56 cents, or 1.1%, to settle at $53.69 a barrel on the New York Mercantile Exchange. The contract was down 0.7% for the week.
March Brent crude LCOH9, +0.69% rose 55 cents, or 0.9%, to $61.64 on ICE Futures Europe, but prices still saw a weekly loss of about 1.7%.
”Military support for Maduro is likely to tip the balance of power in his favor, despite international support for Guiado,” said Jasper Lawler, head of research for London Capital Group, in a note.
“A dramatic escalation in tensions has raised fears that the U.S. could impose sanctions on Venezuelan oil, threatening to complicate OPEC's job of balancing global oil supplies,” Lawler said. “With sanctions already on Iran, further sanctions applied to Venezuela could see the price of oil shoot up very quickly as supply tightens further.”
A defiant Maduro called home all Venezuelan diplomats from the U.S. and closed its embassy, a day after ordering all U.S. diplomats out of the country by the weekend. The Trump administration says Maduro's order isn't legal because the U.S. no longer recognizes him as Venezuela's legitimate leader.
Read: Why Goldman's commodities chief is bullish on oil and gold prices right now
The U.S. threatened to impose sanctions on Venezuela's oil industry that could further hobble the country's exports. The U.S. imported about 17.7 million barrels of crude oil and petroleum products from Venezuela in October 2018, according to the Energy Information Administration .
Developments in Venezuela take on an even greater importance for the oil market considering that the country holds the rotating presidency of OPEC this year, analysts stressed.
Meanwhile, the Energy Information Administration reported Thursday that domestic crude supplies climbed by 8 million barrels for the week ended Jan. 18, a two-month high. That was contrary to expectations for a fall of 600,000 barrels expected by analysts polled by S&P Global Platts.
With the build, U.S. crude stockpiles are now about 8% above the year-ago level and 2.8% above the five-year norm, analysts at PVM Oil Associates said in a Friday note.
Gasoline stockpiles rose by 4.1 million barrels last week, while distillate stockpiles edged down by 600,000 barrels, according to the EIA. The S&P Global Platts survey had shown expectations for supply increases of 2.9 million barrels for gasoline and 900,000 barrels in distillates.
On Nymex, February heating oil HOG9, +0.22% rose 0.3% to $1.892 a gallon, with prices settling 1.3% lower on the week, while February gasoline RBG9, +0.00% added 0.1% to $1.389 a gallon, for weekly loss of 4.4%.
Meanwhile, data from Baker Hughes BHGE, +1.95% on Friday showed that the number of active U.S. rigs drilling for oil , which offers a hint on future production activity, rose by 10 to 862 this week. That followed a hefty drop of 21 in the oil-rig count a week earlier.
The EIA's annual energy outlook report released Thursday said U.S. crude oil production is expected to continue to set annual records through the mid-2020s and will remain greater than 14.0 million barrels per day through 2040. The report also said that U.S. will become a net energy exporter by 2020 as U.S. crude production increases and domestic consumption of petroleum products decreases.
“Supply-side risks could sabotage attempts by OPEC+ to rebalance the oil markets, which may test the resolve of year-to-date price gains in WTI oil,” said Lukman Otunuga, research analyst at FXTM.
Year to date, WTI oil has climbed by roughly 17%. The Organization of the Petroleum Exporting Countries and its allies agreed late in 2018 to collectively hold back crude output by 1.2 million barrels a day for the first half of 2019 to limit a supply glut and boost prices.
Read: Here's what really worries investors about China's slowdown
In other energy trading, February natural gas NGG19, +2.42% rose 2.6% to $3.178 per million British thermal units—still ending about 8.7% lower for the week. The EIA reported Thursday that domestic supplies of natural gas fell by 163 billion cubic feet for the week ended Jan. 18.
We invite you to join us as a sponsor.
Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories
Hit your target - Advertise with us
PW 300.000 plus request per week
Reporting by Myra P. Saefong from MarketWatch.
marketwatch.com 01 24 2019 20:07 GMT
Copyright© 1999-2019 Petroleumworld or respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions Petroleumworld.com as the source.
Other stories you have to get authorization by its authors. Internet web links to http://www.petroleumworld.com are appreciated.
Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.
Write to email@example.com
By using this link, you agree to allow PW
to publish your comments on our letters page.
Any question or suggestions,
please write to: firstname.lastname@example.org
Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels