Oil prices closed lower for the first time in two weeks on Friday as investors paused to assess the economic outlook and OPEC’s ability to counter the US shale boom.
Futures in New York slipped 1.9 percent for the day, ending a nine-day rally that has pushed crude back into a bull market.
Prices slipped along with the S&P 500 as the US government shutdown showed no signs of ending, leaving about 800,000 federal workers without pay.
“It could be just a slight risk-off environment after four days of quite strong rallying in asset markets,” said Frances Hudson, global thematic strategist at Aberdeen Standard Investments in Edinburgh.
US crude prices nonetheless notched their biggest weekly gain in six months, propelled by Saudi Arabia’s assurances that a global oil glut can be averted and positive signs from trade talks between US and Chinese negotiators.
Despite that momentum, the market might level out as traders await proof that OPEC supply cuts are translating into lower stockpiles in the US, said Mark Waggoner, president of brokerage at Excel Futures Inc.
“For another couple of weeks, things are just going to go sideways, but then OPEC’s numbers are going to start following through,” he said. “Once that happens, you’re going to start to see prices go up again.”
Prices remain 30 percent below the four-year highs they hit in October as US shale output continues to surge and manufacturing shows signs of slowing across Europe and Asia.
West Texas Intermediate (WTI) for February delivery on Friday fell US$1 to settle at US$51.59 a barrel on the New York Mercantile Exchange. Its 7.6 percent increase for the week was the best since late June last year.
Brent for March settlement on Friday declined US$1.20 to US$60.48 on the ICE Futures Europe exchange. The contract is up 6 percent for the week.
The global benchmark traded at a premium of US$8.57 a barrel to WTI for the same month.
“On the supply side, things have become much more to OPEC’s liking,” Hudson said. “The question is how much more is production going to increase in the US.”
Saudi Arabian Minister of Energy Khalid Al-Falih on Wednesday said that the cut of 1.2 million barrels a day agreed by the “OPEC plus” coalition would be sufficient to balance markets and that the group is prepared for further action if it proves inadequate.
Other commodities:
Natural gas gained 4.4 percent to US$3.10 per 1,000 cubic feet.
Heating oil lost 1.4 percent to US$1.88 per gallon and wholesale gasoline slipped 2.1 percent to US$1.40 per gallon.
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