Weekly Review

Oil prices rebounded last week as traders decided that the coronavirus was not going to expand much further outside of China and that control measures were starting to work. WTI closed out the week at $52 a barrel and London at $57. The on and off possibility that OPEC+ would cut production further also helped prices. However, Moscow’s resistance to further production cuts and the recent 1 million b/d drop in Libyan output seems to have put a further OPEC+ cut on hold. US crude stocks climbed for a third week as production ticked higher, and exports slowed. Commercial crude inventories increased 7.46 million barrels to 442.47 million barrels during the week ended February 7th.

Oil prices posted a fifth weekly decline, weighed down by the loss of demand from China caused by the coronavirus outbreak. OPEC and Russia tried all week to come up with a unified position on how to contain the price slide. At the close Friday, New York futures were at $50.32 after having been below $50 earlier in the week. Brent closed the week at $54.47. Today, Monday, workers in China officially went back to work after the extended New Year’s holiday, but a large, unknown number of factories, offices, schools, and business establishments remain closed.

Oil prices fell for the fourth straight week on mounting worries about economic damage from the coronavirus that has spread from China to around 20 countries. Futures closed the month down about $10 a barrel since the beginning of the year, seeing the biggest January loss since 1991. New York futures settled at $51.56 and London at $56.62. The rapid price decline is causing much consternation with OPEC+ as some commentators are talking about $40 oil if the virus situation gets much worse.

Brent crude closed at $60.56 on Friday, its biggest weekly decline in more than a year as concerns that the coronavirus will spread farther in China, curbing oil demand. The disease spread rapidly over the weekend, with more than 2,800 people infected across the world and 81 in China killed by the disease. West Texas futures fell from $59 a barrel on Monday to close Friday at $54.20. The Saudi energy minister hinted at further OPEC+ production cuts to head off another market meltdown. The EIA’s latest Drilling Productivity Report estimates oil production growth of just 22,000 b/d in February, a much slower pace than usual in recent years.

Oil prices inched up a bit last week with Brent closing just below $65 a barrel after the US and Iran thought better of going to war. Attention then shifted to the signing of the first phase of a US-China trade deal and the slowing Chinese economy. On Friday, Beijing released data showing that its economy grew by 6.1 percent in 2019, its slowest expansion in 29 years. While Washington is touting the supposed $200 billion it garnered from the trade deal, many trade experts are skeptical. Some are saying that Beijing will never buy the amounts of US products that Washington is claiming, and others are saying that in the long run, China won the tariff war.

Brent futures slipped to below $65 a barrel on Friday as the threat of war in the Middle East receded, and investors focused on rising US inventories and other signs of ample supply. WTI closed at $59 a barrel. During the past week, crude fell by $5 a barrel and is now below where it was before a US drone strike killed Iranian general Soleimani on Jan. 3. US crude inventories rose 1.2 million barrels in the week before last, but gasoline stocks shot up sharply. In the past two weeks, gasoline stocks have increased by more than 22 million barrels. The EIA data was released shortly after President Trump spoke about Iran, a move the market interpreted as a de-escalation of the tensions. The EIA data, combined with the Iran news, sent oil prices tumbling.

Brent crude futures jumped nearly $3 a barrel on Friday after a US airstrike killed top Iranian and Iraqi military commanders in Baghdad. Brent crude futures hit an intraday high of $69.16 a barrel, their highest since Sept 17th, before easing down to $68.60, up $2.35 for the day. West Texas Intermediate futures were up $1.85 or 3.04 percent to $63.05 a barrel, having earlier spiked to $63.84 a barrel, their highest since May 1.

Oil prices rose for the fourth consecutive weekly gain last week, steadying at three-month highs. At the close Friday, Brent was at $68.15 and WTI at 62.72 after the EIA reported an inventory draw of 5.5 million barrels for the week ending December 20 in the last weekly petroleum status report for 2019. Gasoline inventories were up by 2 million barrels in the week to December 20, compared with a build of 2.5 million barrels for the previous week. Distillate fuel inventories declined by 200,000 barrels. Oil prices are now 30 percent higher than they were at the start of the year, and investors are more bullish than they have been in months.

Oil futures finished lower Friday, with declines accelerating after the weekly report on drilling rigs showed a significant increase. However, prices still climbed for a third straight week after easing US-China trade tensions lifted business confidence and the outlook for global economic growth. West Texas Intermediate settled Friday at $60.44, while Brent ended the week at $66.14.

Oil rose on Friday to its highest in nearly three months as progress in resolving the US-China trade dispute was announced, and a decisive Tory win in Britain’s general election appeared to settle two uncertainties that have plagued the markets for months. At the close, NY oil was just over $60 and London was $65.22. There are two major unknowns that will determine where the oil prices go next year. The first is how well OPEC and its associates adhere to the agreement to make additional production cuts, and the second is how much US shale oil production will increase in 2020.