Crude ended the week with a gain after breaching a key US$70 threshold and rallying for five straight days.
Futures rose in New York and London, with both benchmarks closing out the biggest weekly gains since October last year.
This week, investors saw US$70 Brent crude for the first time since 2014 and a steady run of diminishing US crude stockpiles amid healthy demand.
Photo: EPA
Yet doubts linger that a strong price rally above that key level will persist with expanding US output and a rising rig count.
“OPEC’s still doing good on their compliance and consumption is growing. They are getting the inventory drops they have been looking for,” James Williams, president of London, Arkansas-based energy researcher WTRG Economics, said by telephone. Yet, “the price is getting good and with the pop in rig count again, we are going to see a lot more completions in the Permian Basin.”
The US oil rig count climbed by 10 to 752, according to Baker Hughes Inc data released on Friday.
Oil posted a 4.7 percent gain in New York and 3.3 percent rise in London for the week as OPEC and its allies trim output and US inventories shrink. Still, Russian Minister of Energy Alexander Novak on Friday told reporters that producers involved in the supply reduction deal regularly discuss options for winding down the effort.
As Brent hovers near US$70, “it has to put pressure on OPEC to rethink their production cuts and certainly more US production is economically viable,” Rob Haworth, who helps oversee US$150 billion in assets at US Bank Wealth Management in Seattle, said by telephone. “This is a market that could certainly use a pause.”
West Texas Intermediate (WTI) for February delivery on Friday rose US$0.50 to settle at US$64.30 a barrel on the New York Mercantile Exchange, the highest level since December 2014. Total volume traded was about 15 percent above the 100-day average.
Brent for March settlement climbed US$0.61 to end the session at US$69.87 a barrel on the London-based ICE Futures Europe exchange after rising above the US$70 a barrel threshold on Thursday for the first time in three years.
The global benchmark traded at a premium of US$5.64 to March WTI.
This week’s US inventory report showed crude stockpiles falling for an eighth week and hitting the lowest levels since August 2015.
At the same time, production dropped by the most since October last year, as a cold snap disrupted operations.
Hedge funds boosted their bullish ICE Brent crude oil bets to a fresh record in the week that ended on Tuesday, according to weekly ICE Futures Europe data.
“Fundamentals are strong right now, but we think they will fade somewhat, particularly as we start to get out of the winter,” Michael Wittner, the head of commodities research at Societe Generale SA in New York, said by telephone. “Managed money won’t stay at these extreme levels indefinitely. Bottom line is, right now we’re in the camp that prices are a bit overdone.”
Oil market news:
‧ If oil prices remain steady at about US$70 a barrel, for instance for a six-month period, OPEC and its allies should gradually recover production, Lukoil chief executive officer Vagit Alekperov told reporters in Moscow.
‧ China last year passed the US as the largest importer of oil as new refining capacity and independent buyers boosted demand.
To many, Tatu City on the outskirts of Nairobi looks like a success. The first city entirely built by a private company to be operational in east Africa, with about 25,000 people living and working there, it accounts for about two-thirds of all foreign investment in Kenya. Its low-tax status has attracted more than 100 businesses including Heineken, coffee brand Dormans, and the biggest call-center and cold-chain transport firms in the region. However, to some local politicians, Tatu City has looked more like a target for extortion. A parade of governors have demanded land worth millions of dollars in exchange
An Indonesian animated movie is smashing regional box office records and could be set for wider success as it prepares to open beyond the Southeast Asian archipelago’s silver screens. Jumbo — a film based on the adventures of main character, Don, a large orphaned Indonesian boy facing bullying at school — last month became the highest-grossing Southeast Asian animated film, raking in more than US$8 million. Released at the end of March to coincide with the Eid holidays after the Islamic fasting month of Ramadan, the movie has hit 8 million ticket sales, the third-highest in Indonesian cinema history, Film
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue jumped 48 percent last month, underscoring how electronics firms scrambled to acquire essential components before global tariffs took effect. The main chipmaker for Apple Inc and Nvidia Corp reported monthly sales of NT$349.6 billion (US$11.6 billion). That compares with the average analysts’ estimate for a 38 percent rise in second-quarter revenue. US President Donald Trump’s trade war is prompting economists to retool GDP forecasts worldwide, casting doubt over the outlook for everything from iPhone demand to computing and datacenter construction. However, TSMC — a barometer for global tech spending given its central role in the
Alchip Technologies Ltd (世芯), an application-specific integrated circuit (ASIC) designer specializing in server chips, expects revenue to decline this year due to sagging demand for 5-nanometer artificial intelligence (AI) chips from a North America-based major customer, a company executive said yesterday. That would be the first contraction in revenue for Alchip as it has been enjoying strong revenue growth over the past few years, benefiting from cloud-service providers’ moves to reduce dependence on Nvidia Corp’s expensive AI chips by building their own AI accelerator by outsourcing chip design. The 5-nanometer chip was supposed to be a new growth engine as the lifecycle
RSS