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.

Oil prices rose on Friday, closing at $59.08 in N.Y. and $64.31 in London, up about 7 percent for the week. The surge came as a meeting of OPEC and its allies agreed to deepen output cuts by 500,000 b/d in early 2020. The additional reductions will last throughout the first quarter, and the group will meet again in early March for an extraordinary meeting to determine if the cut will be extended. OPEC will shoulder around two-thirds of the additional cuts.

US crude futures fell 5.1 percent to $55.17 a barrel in New York last Friday, paring most of their November rebound and logging their biggest drop since mid-September. Prices are 17 percent below their April peaks. Brent dropped 2.3 percent to $63.43 a barrel on Friday after edging lower on Thursday when US markets were closed for Thanksgiving.

Crude futures climbed by over $3 a barrel in the first four days of last week but settled lower Friday as unease over the status of US-China trade talks increased at the end of a week that saw prices reach their highest level since September. The higher prices came on signs of a tighter physical market and more rumors that OPEC+ would extend the production cuts. But the market is still awaiting direction from the U.S.-China trade war – every utterance in either direction regarding tariffs has an immediate price impact. ICE Brent January futures settled 58 cents lower day on day Friday at $63.39, while the NYMEX January light sweet crude futures contract settled down 81 cents at $57.77.

US futures fluctuated between $56 and $57.50 last week as stockpiles rose, the rig count dropped, and hopes for a breakthrough in the US-China trade negotiations kept coming and going. Brent rose above $63 a barrel on Thursday after China hinted at progress towards a trade deal with the United States. The 16-month trade war between the world’s two biggest economies has slowed economic growth around the globe and prompted analysts to lower forecasts for oil demand, raising concerns that a supply glut could develop in 2020.

On Wednesday, the price of oil came under pressure after the EIA reported a crude oil inventory build of 5.7 million barrels for the week to October 25. Analysts had expected a much smaller build of 729,000 barrels after a 1.7-million-barrel draw interrupted a string of five weekly inventory builds.

Prices were up about $2 last week on an unexpected drawdown in US crude stocks and rumors that OPEC+ is considering another production cut. Forecasters see a supply glut continuing in 2020 due to slowing economies and growth in US shale oil production. Beyond that, prices could increase considerably as supply growth slows to a trickle. Goldman Sachs says that slowing US shale production growth combined with a shortage of investment in long-term projects will lead to a new boom.

Oil prices slipped last week with Brent down 1.8 percent to close at $59.42. WTI closed $53.82, down 1.7 percent. Concerns increased about China’s economy, which slowed to 6 percent year-over-year growth in the third quarter, the slowest growth in 27-1/2 years. Many outside observers of China’s economy have noted for years that GDP numbers are likely inflated due to the nature of China’s economic reporting systems. Crude inventories continue to grow with US crude inventories up by 9.3 million barrels in last week’s stockpiles report.

Oil prices rose 2 percent on Friday after the US and China seemed to hammer out a trade deal that postponed tariffs. However, after studying the details – or lack thereof – investors lost much of their enthusiasm. Crude prices were down about 2 percent on Monday on worries that global crude demand could stay under pressure. The few details about the first phase of a U.S.-China trade deal did little to assure a quick resolution to the tariff fight.

Oil prices have hovered in the mid to low $50s since late July. They spiked briefly into the low $60s after the Saudi oil facilities were attacked but quickly settled back on news that the Saudis would be able to repair the damage quickly. Conventional wisdom says that the Russian-Saudi production freeze is keeping prices from going lower. At the same time falling demand is holding a lid on prices despite slowing production and lower exports in several countries. Geopolitical risk has receded as the top concern of oil traders. To quote one trader, “everything is about weak demand now.”

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The US oil and gas rig count fell by eight this week, according to Baker Hughes, adding to months of losses, as US oil production falls to its lowest level since October 2018. The total number of active oil rigs in the United States fell by three, according to the report, reaching 776. The number of active gas rigs decreased by 5 to reach 169.

After six days of steady price drops that took prices down about $5 a barrel, oil rebounded about 1 percent on Friday. The rebound came on news that Iran had seized a British registered tanker while sailing in Omani waters through the Straits of Hormuz. Oil closed out the week at $55.63 in New York and $62.47 in London.

The storm in the Gulf of Mexico and geopolitical tensions in the Middle East pushed New York oil futures above $60 a barrel last week, with NY closing at $60.31 and Brent at $66.86. Nearly 70 percent or 1.3 million b/d of the Gulf’s oil production was shut in as oil producers evacuated 283 platforms in the northern Gulf. Natural gas production from the Gulf was cut by 56 percent. The slow-moving storm is producing unprecedented flooding, and it may be the middle of the week before the extent of the damage to onshore oil and petrochemical facilities is known.

Concerns about the weakening global economy and oil demand growth trumped Middle Eastern tensions and the OPEC+ rollover of the production cuts into 2020, sending oil prices lower for most of last week. Prices rebounded on Friday by a dollar or so with London futures closing out the week at $64.27, down about $2.50 from the week’s high on Tuesday, and New York closing at $57.61. Now that the OPEC+ efforts to force up oil prices are out of the way for another nine months, attention is focusing on US shale oil production, the slowing global economy, the US-China trade dispute, and the increasingly serious effects of climate change.