Crude Oil Surges Despite Headwinds
Despite facing tough headlines, crude oil added to recent gains on Friday, marking its fourth winning week out of five. The rise in oil prices was fueled by escalating tensions in the Middle East, underscoring its resilience in the face of challenges.
Challenges in the Market
The week saw some daunting developments, with U.S. stockpiles recording a substantial 12M-barrel build, the largest weekly increase since November. Additionally, the IEA’s announcement about global oil demand losing momentum and non-OPEC+ supplies rising, along with higher than expected U.S. inflation reports, painted a complicated picture for the oil market.
Market Analyst Insights
Bloomberg’s Grant Smith emphasized that time spreads for the WTI and Brent benchmarks are signaling tight conditions, indicating the market’s ability to maintain prices at current levels, barring significant supply shocks. The bullish outlook is further supported by historical data, with Bloomberg’s seasonal analysis suggesting a modest increase of 1.4% in Q1, while the current quarter has seen gains of approximately 5.5% so far.
Furthermore, prominent oil market watchers such as Standard Chartered, J.P. Morgan, and Morgan Stanley have expressed growing bullishness, projecting higher prices for oil in the near term. Standard Chartered believes Brent prices should surpass $90/bbl, J.P. Morgan sees oil climbing an additional $10 by May, and Morgan Stanley raised its price forecast in light of the surprisingly tight conditions.
Crude Oil Prices
Front-month Nymex crude for March delivery closed at $79.19/bbl on Friday, marking its highest settlement value since November 6. Additionally, front-month April Brent crude closed at $83.47/bbl. For the week, WTI surged 3%, and Brent added 1.5%.
Other Commodities in Review
U.S. natural gas experienced declines over the past five weeks, with a 12.9% decrease for the week at $1.609/MMBtu, its second-lowest settlement this year. Energy and natural resource equities, as represented by the Energy Select Sector SPDR, finished the week with a gain of 1.5%.
Market Gainers and Decliners
Top gainers in the energy and natural resources sector over the past five days include Fusion Fuel Green, Verde Clean Fuels, Nouveau Monde Graphite, Meta Materials, and DNOW. On the other hand, the top decliners during the same period were SSR Mining, Fluence Energy, Bloom Energy, Global Gas, and Encore Energy.
Source: Barchart.com