Oil Prices Settle Lower for the Week Amid Fed Worries and Ample Supply

On Thursday, two Fed officials warned additional hikes in borrowing costs are essential to curb inflation. The sentiments lifted the U.S. dollar, making oil more expensive for holders of other currencies.

Brent crude futures settled down $2.14 or 2.5%, to $83.00 a barrel, falling 3.9% week on week. West Texas Intermediate (WTI) U.S. crude settled down $2.15, or 2.7%, to $76.34, falling 4.2% from last Friday’s settlement.

“Rate hike jitters have returned with a vengeance,” said Stephen Brennock of oil broker PVM.

Various signs of ample supply also weighed on the market.

Russian oil producers expect to maintain current volumes of crude oil exports, despite the government’s plan to cut oil output in March, the Vedomosti newspaper said on Friday, citing sources familiar with companies’ plans.

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The latest snapshot of U.S. supplies, released on Wednesday, showed crude inventories in the week to Feb. 10 rose by 16.3 million barrels to 471.4 million barrels, their highest level since June 2021.

“Because oil storage is at a 19 month high, refiners are going to stretch out turnaround season for as long as they can,” said Bob Yawger, director of energy futures at Mizuho.

Heating oil cracks fell 5% on Friday as warm weather sapped demand for the fuel in mid-February.

The oil and gas rig count, an early indicator of future output, fell by one to 760 in the week to Feb. 17, energy services firm Baker Hughes Co (BKR.O) said on Friday.

Despite this week’s rig decline, Baker Hughes said the total count was still up 115, or 18%, over this time last year.

Some support came from moves this week by the International Energy Agency and the Organization of the Petroleum Exporting Countries to raise their forecasts for global oil demand growth this year, citing expectations for more Chinese demand.

And Saudi Arabia’s energy minister said the current deal by OPEC+, which groups OPEC producers with Russia and others, to cut oil output targets by 2 million barrels per day, would be locked in until the end of the year, adding he remained cautious on Chinese demand.

Additional reporting by Alex Lawder, Yuka Obayashi and Sudarshan Varadhan; editing by Jason Neely, Kirsten Donovan and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

Laura Sanicola

Thomson Reuters

Reports on oil and energy, including refineries, markets and renewable fuels. Previously worked at Euromoney Institutional Investor and CNN.

2023-02-18 14:00:03
Original from www.reuters.com

Oil prices closed out the week lower, largely due to ongoing concerns about global economic growth combined with ongoing issues regarding ample global supply.

The latest moves lower come on the heels of news from the US Federal Reserve that it expects to keep interest rates lower for longer than expected, sparking worries about the global economic outlook. US crude prices for the week ended on October 18th, 2019 stood at $53.05 per barrel, down nearly 6 percent from the week prior.

At the same time, ample global supplies have also contributed to the lower prices. The US has become a major producer in recent years, with output reaching a record high of 12.5 million barrels a day in 2019. This, combined with major producers such as Saudi Arabia and Russia refusing to cut production, has led to an oversupply in the global market.

All of this has been reflected in crude prices, which have now declined for four straight weeks. With little in the way of geopolitical risk or indications of production cuts, analysts expect the current bearish trend to continue, at least in the near-term.

As might be expected, the lower prices have weighed on energy stocks on Wall Street. Major companies such as Chevron, ExxonMobil, and Royal Dutch Shell have all seen their share prices decline over the past week.

For now, the outlook remains dim for oil prices, as investors remain concerned about global economic growth and the possibility of an oversupply in the energy markets. Both of these factors are likely to continue to weigh on prices in the near-term.