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Crude oil futures posted a second straight weekly decline, punctuated by sharp losses on Friday as a global internet outage heightened risk sentiment in markets and helped lift the dollar.
Growing concerns over Chinese demand are weighing on the market, following Data this week points to a weaker demand picture, while expectations of a tight market through the third quarter provide a floor for prices, said Warren Patterson and Ewa Manthey, ING strategists. Market monitoring.
Investors may also look to: Possibility of a ceasefire in GazaSecretary of State Blinken also said that a long-awaited agreement between Israel and Hamas is on the horizon.
The crude oil market is clearly narrow “Currently, with inventory draws, strong lagging, and strong physical spreads,” Morgan Stanley said in its report, as reported by Dow Jones, “the balance is likely to return to balance in the fourth quarter when the tailwinds of seasonal demand ease and OPEC and non-OPEC supply return to growth.”
Morgan Stanley still expects Brent crude to reach the mid-80s in the third quarter, and possibly in the fourth quarter as well when inventories stabilize, but the bank expects a drop to the mid-70s in 2025 when it sees supply outstripping demand.
Nymex crude (CL1:COM) for August delivery fell 3.2% on Friday. -2.5% During the week to $80.13 per barrel, Brent crude (CO1:COM) for September delivery fell (2.9%) on Friday. -2.8% This week to $82.63 per barrel.
U.S. natural gas futures for August delivery (NG1:COM) ended a volatile week. -8.6% To $2.128/MMBtu due to lower LNG shipments and cooler weather forecasts in the near term.
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Traders may also look to politics, with the odds of Donald Trump winning the November presidential election rising, but “Trump’s oil business is not clearSwissquote Bank analyst Ipek Ozkardeskaya said, according to: Market monitoring.
The inflationary environment could keep WTI crude on a positive path above key support at $80 a barrel in the near term, but a move much higher would be unlikely as higher oil prices boost inflation expectations and could dampen bets on Fed easing, Ozkardeskaya said.
Citi analysts see oil fundamentals as “significantly more downward“Starting in the fourth quarter, with the odds of a Trump presidency rising, which increases the likelihood of announcing higher tariffs, oil traded very poorly on the tariff headlines.”
Trump led delegates at the Republican convention in loud chants of “Drill, baby, drill,” but It is not clear whether companies will agree.Kevin Bock of ClearView Energy Partners told Bloomberg:
But Trump’s message does not appear to reflect a desire among top U.S. oil executives to dramatically increase production, instead embracing financial discipline and a focus on shareholder returns.
But while there are few meaningful restrictions on drilling that Trump could roll back, the new administration could impact the demand side with a rethink of electric-vehicle incentives and fuel-economy standards, said Benjamin Salisbury, director of research at Height Capital Markets.
The energy sector (XLE), as represented by the Select Energy Sector SPDR Fund ETF, was the best performing sector for the week, +2%.
Top 5 Energy and Natural Resources Gains in the Past 5 Days: Hawaiian Electric (HE) +67.9%KLX Energy Services (KLXE) +21%New Fortress Energy (NFE) +20.7%Perma Pipe International (PPIH) +15.8%Long (LGO) +14.5%.
Top 10 Declining Energy & Natural Resources Companies Over the Past 5 Days: Nuscale Power (SMR) -26.3%Nano Nuclear Energy (NNE) -22.8%Lightbridge (LTBR) -22.7%ASP Analogues (ASPI) -18.4%Power plug (PLUG) -18.1%Vestra Energy (VST) -16.2%Indonesia Energy (INDO) -15.5%Energy Fuel (UUUU) -15.1%Calumet Specialty Products (CLMT) -14.3%Ballard Power Company (BLDP) -14.2%.
Source: Barchart.com