Oil futures headed lower on Friday, with U.S. benchmark crude easing back after settling above $90 a barrel for the first time this year, but prices remain on track to score a third weekly gain in a row on continued worries over tight supplies.
Price action
-
West Texas Intermediate crude
CL00,
+0.75%
for October delivery
CL.1,
+0.75% CLV23,
+0.75%
fell 29 cents, or 0.3%, to $89.87 a barrel on the New York Mercantile Exchange, on track for a weekly rise of 2.7%, FactSet data show. -
November Brent crude
BRN00,
+0.27% BRNX23,
+0.27% ,
the global benchmark, was down 28 cents, or 0.3%, at $93.42 a barrel on ICE Futures Europe, headed for an advance of 3% on the week. -
October gasoline
RBV23,
-0.79%
traded at $2.6989 a gallon, down 1.6% for the session though eying a weekly rise of 1.8%. October heating oil
HOV23,
-2.92%
shed 2.7% to $3.3892 a gallon, poised for a weekly rise of 2.8% for the week. -
October natural gas
NGV23,
-1.14%
added 0.4% to $2.718 per million British thermal units, trading up 4.3% for the week.
Market drivers
While fourth quarter oil-supply deficits have been expected for months, recent refinery outages limiting products supplies and the extension of voluntary supply cuts by Saudi Arabia over the past month have helped push crude prices above some key technical resistance levels, Troy Vincent, senior market analyst at DTN, told MarketWatch.
That’s “opening the door” for prices to move another $5 to $8 a barrel in the coming weeks, he said.
A 1 million-barrel-a-day production cut implemented by Saudi Arabia in July and recently extended through the end of the year, alongside with a supply cut from Russia, have solidified expectations for a growing supply deficit heading into the fourth quarter.
WTI settled Thursday at $90.16 a barrel on the New York Mercantile Exchange, the highest finish for a front-month contract since Nov. 7, according to Dow Jones Market Data. Brent saw its highest close since Nov. 15.
However, “with the U.S. dollar nearing its highs for the year, medium sour crudes from Saudi Arabia already trading over $100 [a barrel], and central banks continuing to raise or hold interest rates at historically high levels, demand should begin to slow as we work through Q4,” said Vincent.
He also pointed out that China, “who has amassed enormous crude stocks over the past year, should begin to lean on inventories built at far cheaper prices and import less crude.”
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