Oil futures Friday afternoon headed sharply lower, with declines accelerating after a weekly report on drilling rigs showed a big increase.
Baker Hughes reported that the number of active U.S. rigs drilling for oil rose by 18 to 685 this week, marking a second straight weekly rise in rigs. The total active U.S. rig count also climbed by 14 to 813, according to Baker Hughes.
West Texas Intermediate crude for February delivery
CLF20, +0.61%,
the U.S. benchmark grade, fell 98 cents, or 1.6%, to trade at $60.20 a barrel on the New York Mercantile Exchange, after gaining 0.5% on Thursday, when it marked its highest settlement since Sept. 16, according to Dow Jones Market Data. The January contract expired at the end of Thursday’s trade.
February Brent crude
BRNG20, -0.17%
shed 58 cents, or 0.9%, at $65.96 a barrel on ICE Futures Europe, threatening to snap a sixth straight session of gains, its longest win streak since Jan. 10, following a rise of 0.6% on Thursday. The international oil benchmark also hit its highest finish since Sept. 16.
“I think the overall picture is that we’re down today mainly due to profit taking as traders go into the holiday nervous about remaining [long] oil,” Phil Flynn, senior market analyst at Price Futures Group told MarketWatch.
“The losses accelerated a bit after the increase in rig counts,” he said. He said crude futures have enjoyed a healthy weekly run-up, with a period of seasonally light volume expected to possibly yield outsize moves in either direction.
“It’s Christmas next week,” Flynn said. “A lot of traders aren’t going to be here,” he said.
For the week, WTI is clinging to a weekly gain of 0.3%, despite its sharp drop, while Brent oil is poised for a weekly advance of 1.2%, according to FactSet data. Both contracts are on pace for a third weekly climb in a row.
“Along with the growth of stock indices, the growth of oil prices also attracts attention,” said Alex Kuptsikevich, senior market analyst at FxPro. “Avoiding sharp movements, it shows a strengthening for the last seven trading sessions, moving closer towards the heights since July.”
Oil prices have been mostly bolstered by more optimistic expectations for the global economy and Sino-American trade developments, as well as the decision earlier this month by the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, to deepen production cuts.
On Thursday, China revealed a list of import tariff exemptions for six chemical and oil products from the U.S., according to a report from CNBC.
However, some commodity experts warn that global crude supplies could overwhelm demand in 2020, with the oil market oversupplied by 0.3 million barrels a day in the coming year, according to a recent report by UBS analysts.
UBS lifted its oil-price forecast for next year to $60 a barrel for the first quarter and $62 a barrel in the following quarter from $58 and $55, respectively.
In other energy trade, February gasoline
RBF20, -0.18%
slipped 0.1% to $1.705 a gallon, while February heating oil
HOF20, -0.52%
gave up 0.3% to $2.023 a gallon.
Meanwhile, January natural gas
NGF20, +2.68%
jumped 2.4% to $2.328 per million British thermal units, after sliding 0.6% on Thursday, with that decline sparked by U.S. supply figures.
The EIA on Thursday reported that domestic supplies of natural gas fell by 107 billion cubic feet for the week ended Dec. 13. Analysts expected a fall of 93 billion cubic feet, on average, according to a survey conducted by S&P Global Platts.
Source : MTV
