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Crude oil futures fell for a third straight week, starting with a sell-off triggered by OPEC+’s decision to lift 2.2 million barrels per day of voluntary production cuts later this year, gradually bringing some barrels back to the market later this year.
To stem the sell-off, Saudi Arabia’s energy minister said OPEC+ plans to gradually bring some oil back to the market may be suspended or withdrawn.
But in a clear sign of demand uncertainty, Saudi Arabia cut prices for its flagship Arabian Light crude oil to Asian customers after raising prices for three months in a row.
Oil prices rebounded on Thursday on renewed hopes of a U.S. interest rate cut after the European Central Bank cut interest rates for the first time since 2019, but the rebound ran out of steam on Friday as U.S. payrolls rose much more than expected in May.
A strong jobs report could delay expectations for when the Federal Reserve will begin cutting interest rates.
Schneider Electric’s Robbie Fraser writes that, all other things being equal, “lower interest rates are nominally positive for equity and commodity prices, suggesting that if the rate cut schedule continues to be pushed back, it could have a negative impact on crude oil prices going forward.” Price pressure.” market observation.
Also this week, the United States released bearish oil data. Domestic commercial crude oil inventories increased by 1.2 million barrels in the week to May 31, compared with expectations for a decrease of 1.6 million barrels, while gasoline and distillate inventories increased, exacerbating concerns about oil. Price concerns.
On Friday, Baker Hughes said the number of active U.S. oil rigs, an early indicator of future production, fell to its lowest level since January 2022.
Also on Friday, the U.S. Department of Energy announced plans to purchase an additional 6 million barrels of oil to replenish the Strategic Petroleum Reserve.
Nymex front-month crude oil for July delivery (CL1:COM) ends the week -1.9% To $75.53/barrel, front month August Brent crude oil (CO1:COM) closed -1.8% This week to $79.62/barrel; on Friday, WTI crude oil closed flat and Brent crude oil fell 0.3%.
Meanwhile, front month July Nymex Natural Gas (NG1:COM) rose this week, +12.8% to $2.918/MMBtu as hot weather boosted demand from the power sector and the prospect of reduced inventory overhangs.
ETF:(New York Stock Exchange: Use), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI), (UNG), (BOIL), (COLD), (UNL), (FCG)
Hedge funds this week sold off bullish bets on Brent crude and added to short positions following the OPEC+ decision, driving positions to their least optimistic levels in nearly a decade, according to Bloomberg.
Fund managers’ net long positions in Brent fell by 102,075 lots to 45,678 lots as of Tuesday, the lowest level of net long positions since September 2014, according to ICE European Futures weekly data.
OPEC+ ministers tried to reassure markets that their plans could be adjusted based on market conditions, helping oil prices pare losses this week and perhaps reversing fund managers’ stance on next week’s data.
Energy sectors, as shown in the Energy Select Sectors SPDR ETF (NYSE:XLE), one of the two worst performers this week, -3.2%.
Top 5 Gainers in Energy & Natural Resources over the Last 5 Days: Flotek Industries (FTK) +16.6%Westport Fuel System (WPRT) +15.7%Knot Offshore Partner (KNOP) +12.7%Osisko Development Company (ODV) +8.9%Next decade (NEXT) +8.8%.
Top 10 losers in energy and natural resources over the past 5 days: ASP Isotopes (ASPI) -21.5%Fortuna Silver Mine (FSM) -20.3%Ivanhoe Electric (IE) -19.9%enCore Energy (EU) -15.2%Energy Fuel(UUUU) -15.1%Uranium Energy (UEC) -14.3%Vistra Energy (VST) -14.1%Taseko Mining (TGB) -14.1%YPF (YPF) -13.7%Transgas South (TGS) -13.7%.
Source: Barchart.com
