Crude on Friday posted a second weekly gain as a whirlwind of rising geopolitical concerns stole the shale boom’s limelight.
Futures in New York jumped 1.9 percent, driving the US benchmark to post a 0.5 percent rise this week after a shaky start on Monday and Tuesday.
While record US production beyond 10 million barrels per day has weighed on oil’s rebound, a sense of uncertainty was heightened by a slew of events, such as the firing of US Secretary of State Rex Tillerson, the potential delay of Saudi Arabian Oil Co’s initial public offering, talks of a trade war and expectations that Venezuelan production will plunge.
“You’ve got a lot going on, on the world stage,” New York-based Nasdaq Inc analyst Tamar Essner said by telephone.
“The more unexpected elements of this week’s developments were on the macro, international, geopolitical front. We are setting ourselves up for a little volatility ahead,” she added.
While OPEC and allied producers trim output to tighten global markets, an ongoing rise in US crude production threatens to block their efforts.
However, the International Energy Agency this week said that the decline in Venezuela’s oil output could exacerbate a global supply deficit later this year.
West Texas Intermediate for delivery next month advanced US$1.15 to settle at US$62.34 per barrel on the New York Mercantile Exchange, the highest level in more than a week. Total volume traded was about 25 percent less than the 100-day average.
Brent for May settlement climbed US$1.09 to end the session at US$66.21 per barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a US$3.80 premium to West Texas Intermediate for the same month.
The market was little changed earlier in the session before spiking just before 11:30am in New York, with no news catalyst identified by traders and analysts.
“When the market falls into sideways trading in a band, you get a lot of price fluctuations that you have to turn a blind eye to,” Stamford, Connecticut-based Tradition Energy market research manager Gene McGillian said.
“This area between US$58 and US$64, the market inside that, is still consolidating and looking for signals,” he added.
Yet, Bank of America Merrill Lynch analysts, including Francisco Blanch, wrote in a report that oil might fall by US$5 in the next few weeks if “some of the bears wake up from winter hibernation” and short positions return.
Hedge funds boosted bullish ICE Brent crude oil bets by 0.1 percent in the week ended on Tuesday, weekly ICE Futures Europe data on futures and options showed.
Gasoline futures on Friday climbed 1.1 percent to settle at US$1.9459 per gallon, the highest level since August last year.
In other energy trading, wholesale gasoline gained US$0.02 to US$1.95 per gallon, while heating oil picked up US$0.02 to US$1.91 per gallon and natural gas edged up US$0.01 to US$2.69 per 1,000 cubic feet.
Gold dipped US$5.50 to US$1,312.30 per ounce, silver lost US$0.15 to US$16.27 per ounce and copper fell US$0.02 to US$3.11 per pound.
Additional reporting by AP
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