Oil futures remained stuck in a tight trading range Friday, with U.S. the benchmark on track for a weekly loss of nearly 5%, as signs of a weakening global economy threaten a slowdown in energy demand.
Traders also continue to assess risks to global supply from OPEC output cuts and U.S. sanctions on Venezuela, which offer support to prices.
U.S. benchmark March West Texas Intermediate crude oil US:CLG9 was down 15 cents, or 0.3%, at $52.50 a barrel on the New York Mercantile Exchange, trading between a low of $52.08 and high of $52.99. Prices traded 4.9% lower for the week.
International benchmark April Brent LCOJ9, +0.62% edged up 29 cents, or 0.5%, to $61.92 a barrel on ICE Futures Europe. It’s down by a smaller amount for the week, roughly 1.3%.
The weekly drop was fueled by Thursday’s sharp retreat, which came amid worries about energy demand, a stronger dollar that makes U.S.-priced commodities less attractive, and reports that Libya could soon increase production. China-U.S. trade uncertainty and a vulnerable stock market are adding to the worrisome economic picture highlighted by oil bears.
“Growing economic concerns, falling stock markets and emerging doubts that the trade conflict between the U.S. and China will be resolved are putting oil prices under pressure,” said Carsten Fritsch, commodities analyst at Commerzbank.
“Following its steep rise at the beginning of the year, Brent has mostly been moving in a narrow range of between $60 and $63 per barrel since mid-January,” Fritsch added. “If it drops below this corridor, the price could come under greater pressure due to technical follow-up selling. After all, the price increase in January was accompanied by considerable speculative buying.”
The ICE U.S. Dollar Index DXY, +0.08% was up a touch, trading 1% higher week to date. The gauge was trying for a seventh advance in a row, according to FactSet. A richer dollar makes those commodities priced in the unit less attractive to investors using another currency.
The decline in oil prices this week came as the European Commission slashed growth forecasts for the eurozone and its major economies sharply for 2019 and 2020, further stoking concerns of a global growth slowdown.
As for the supply picture, a Libyan general took control this week of the country’s largest oil field, the Sharara, raising the likelihood the facility will restart production, according to The Wall Street Journal. Libya, a member of the Organization of the Petroleum Exporting Countries, is currently exempt from the cartel’s agreement to curb production due to the civil unrest that has plagued its oil industry and economy.
OPEC and 10 partner producers outside the cartel agreed late last year to hold back crude output by 1.2 million barrels a day for the first half of 2019, in an effort to sop up that global supply glut and rebalance the market. OPEC, excluding Iran, Libya and Venezuela, agreed to handle 800,000 barrels a day of those cuts. Also reported this week, OPEC officials said Saudi Arabia and its Persian Gulf allies were looking to create a formal partnership with a 10-nation group led by Russia to manage the world’s oil market.
Oil remains higher for the year to date, with WTI front-month contract prices up about 16%. The political crisis in Venezuela was part of the reason prices were rising in previous weeks, but this seems to have been priced in by now, some analysts have said.
Natural-gas futures bounced back somewhat on Friday after settling at a two-year low Thursday. The sharp drop a day earlier came as a weekly tally of U.S. supplies of the commodity fell less than expected. The EIA said domestic supplies of natural gas fell by 237 billion cubic feet for the week ended Feb. 1. That was smaller than the 249 billion-cubic-foot decline expected by analysts polled by S&P Global Platts.
March natural gas NGH19, +2.31% rose 0.7% at $2.568 per million British thermal units. The contract tumbled 4.2% to $2.551 Thursday. That was the lowest for a front-month contract since Aug. 11, 2016, according to Dow Jones Market Data. For the week, prices were down about 6%.
In other Nymex trading, March gasoline RBH9, +1.03% rose 0.4% to $1.432 a gallon, trading 0.4% lower on the week, and March heating HOH9, +0.43% added 0.4% to $1.907 a gallon, set for a weekly loss of 0.3%.
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