Oil headed for a second weekly gain after OPEC+ leaders Saudi Arabia and Russia tightened supplies.
(Bloomberg) — Oil headed for a second weekly gain after OPEC+ leaders Saudi Arabia and Russia tightened supplies.
West Texas Intermediate rose to the highest intraday price in almost a month, supported by risk-on sentiment Friday that propelled gains across markets. Crude is on track for its first back-to-back weekly increase since May, with near-term time spreads flipping into a narrow backwardated structure, a bullish pricing pattern.
“We remain cautiously bullish,” said Keshav Lohiya, founder of consultant Oilytics. “We think backwardation is here to stay and any major dips in crude structure should be bought. OPEC might have little control on flat price, but they will have control on the curve structure.”
Saudi Arabia set large price increases for its crude to Europe and the Mediterranean after announcing an extension into August of its unilateral 1-million-barrel-a-day supply cut. In addition, Russia said it would reduce exports by half a million barrels, although output won’t be lowered. The costlier Saudi grades are pushing refineries across the Atlantic Basin to seek alternatives, causing the price of Norway’s North Sea crude to surge.
Crude remains down about 10% this year, with tighter monetary policy, China’s lackluster recovery, and resilient Russian exports pressuring futures. This week’s price rise came despite a broad move lower in other risk assets, as robust US jobs numbers reinforced bets the Federal Reserve will keep hiking interest rates.
US job gains slowed last month, according to data released Friday, but wage growth remained strong, reinforcing expectations of interest rate hikes.
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