Oil prices tally 4th straight weekly gain as data hint at better demand

By Myra P. Saefong and William Watts

Natural-gas futures end nearly 11% lower for the week

Oil futures fell on Friday, but U.S. and global benchmark prices tallied a fourth straight weekly gain as a recent drop in U.S. crude supplies and a rise in gasoline demand helped ease some concerns over the outlook for energy demand.

Some analysts attributed weakness in Friday's session to holiday-related low trading volume.

Price moves

West Texas Intermediate crude CL00 for August delivery CL.1 CLQ24 declined by 72 cents, or 0.9%, to settle $83.16 a barrel on the New York Mercantile Exchange. Front-month prices ended 2% higher for the week, according to Dow Jones Market Data. WTI futures didn't settle Thursday due to the holiday.September Brent crude BRN00 BRNU24, the global benchmark, lost 89 cents, or 1%, to end at $86.54 a barrel on ICE Futures Europe, but gained 1.8% for the week, according to Dow Jones Market Data.August gasoline RBQ24 shed 1.6% to $2.56 a gallon, but gained 2.3% for the week, while August heating oil HOQ24 fell 1.2% to $2.60 a gallon, yet tacked on 2.7% from a week ago. Natural gas for August delivery NGQ24 finished at $2.32 per million British thermal units, down 4.1% for the session and logging a weekly loss of 10.8%.

Market drivers

Friday was a low-volume day, with many traders staying on the sidelines, noted Manish Raj, managing director at Velandera Energy Partners.

"Oil's handsome rally over the past weeks is eager to continue its journey upwards, but there are moments of pause to make sure the price does not overshoot the fundamentals," he told MarketWatch. "Traders aren't willing to throw caution to the wind, so are being mindful of getting ahead of themselves."

WTI and Brent crude ended lower for Friday's trading session after giving up an early climb, but both benchmarks logged weekly gains for a fourth week in a row.

WTI's streak of weekly gains is the longest since the week ended Aug. 11, 2023.

Expectations for a third-quarter supply deficit, stronger summer travel and worries over a wider conflict in the Middle East have been cited as providing support.

Weekly data from the Energy Information Administration on Wednesday helped lift crude prices, showing a larger-than-expected 12.2-million-barrel weekly drop in crude inventories and a rebound in motor gasoline supplied, a proxy for gasoline demand.

The large drawdown in U.S. oil stocks "helped to reduce demand concerns that had been highlighted by weakness in factory data in the U.S. and Germany," said Fawad Razaqzada, market analyst at City Index and FOREX.com.

"Investors will want to keep an eye on inventories data to see whether the most recent drop was just an anomaly or whether more oil will be drawn from inventories," he told MarketWatch. "If we see more drawdowns, then this should further support the oil-price recovery."

The inventory data, however, is being taken with a grain of salt due to likely adjustments by refiners due to Hurricane Beryl, said analysts at Sevens Report Research, while a recent run of soft economic data - including this week's Institute for Supply Management manufacturing and services indexes - are stoking concerns about the growth outlook.

Read: Hurricane Beryl puts focus on oil with climate change likely to intensify storms

"Those dynamics leave strong, yet skewed, current market fundamentals to be weighed against increasingly uncertain economic expectations that pose a threat to demand" in the second half, the analysts said, which are likely to leave WTI futures capped at resistance near this week's high at $84 a barrel.

The near-term trend, however, remains bullish, so a break in upside momentum would be needed to provide price confirmation of that outlook, they said.

In other energy trading, natural-gas futures finished lower Friday, contributing to a weekly loss of nearly 11% to settle at the lowest since May 10.

Natural-gas prices have eased back following a 47.5% gain in the second quarter, which was the largest quarterly rise since the first quarter of 2022.

-Myra P. Saefong -William Watts

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07-05-24 1536ET

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