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Oil rose on Friday to its highest in nearly three months as progress in resolving the US-China trade dispute was announced, and a decisive Tory win in Britain’s general election appeared to settle two uncertainties that have plagued the markets for months.
Oil prices rose on Friday, closing at $59.08 in N.Y. and $64.31 in London, up about 7 percent for the week. The surge came as a meeting of OPEC and its allies agreed to deepen output cuts by 500,000 b/d in early 2020.
US crude futures fell 5.1 percent to $55.17 a barrel in New York last Friday, paring most of their November rebound and logging their biggest drop since mid-September. Prices are 17 percent below their April peaks. Brent dropped 2.3 percent to $63.43 a barrel on Friday after edging lower on Thursday when US markets were closed for Thanksgiving.
Crude futures climbed by over $3 a barrel in the first four days of last week but settled lower Friday as unease over the status of US-China trade talks increased at the end of a week that saw prices reach their highest level since September.
But, curiously, this renaissance of petroleum in the United States has not led to a resurgence of profits in the oil and gas industry. Quite the opposite, because almost none of the companies that have invested in fracking are turning a profit. Investors in this industry are losing a lot of money, some $83 billion since 2008, according to oil analyst Arthur Berman.
US futures fluctuated between $56 and $57.50 last week as stockpiles rose, the rig count dropped, and hopes for a breakthrough in the US-China trade negotiations kept coming and going. Brent rose above $63 a barrel on Thursday after China hinted at progress towards a trade deal with the United States.
On Wednesday, the price of oil came under pressure after the EIA reported a crude oil inventory build of 5.7 million barrels for the week to October 25. Analysts had expected a much smaller build of 729,000 barrels after a 1.7-million-barrel draw interrupted a string of five weekly inventory builds.
Prices were up about $2 last week on an unexpected drawdown in US crude stocks and rumors that OPEC+ is considering another production cut. Forecasters see a supply glut continuing in 2020 due to slowing economies and growth in US shale oil production.
Oil prices slipped last week with Brent down 1.8 percent to close at $59.42. WTI closed $53.82, down 1.7 percent. Concerns increased about China’s economy, which slowed to 6 percent year-over-year growth in the third quarter, the slowest growth in 27-1/2 years.
Oil prices rose 2 percent on Friday after the US and China seemed to hammer out a trade deal that postponed tariffs. However, after studying the details – or lack thereof – investors lost much of their enthusiasm.
The US oil and gas rig count fell by eight this week, according to Baker Hughes, adding to months of losses, as US oil production falls to its lowest level since October 2018.
After six days of steady price drops that took prices down about $5 a barrel, oil rebounded about 1 percent on Friday. The rebound came on news that Iran had seized a British registered tanker while sailing in Omani waters through the Straits of Hormuz.
