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Futures Movers: U.S. oil prices end longest-ever streak of weekly gains as natural gas retreats

Oil futures declined on Friday, with U.S. prices ending a streak of nine consecutive weekly gains — the longest on record — as rising domestic crude inventories, the potential for revived Iran nuclear talks, and a retreat by natural-gas futures dragged crude prices further away from multiyear highs.

“The oil market has experienced an imperfect storm,” Michael Lynch, president of Strategic Energy & Economic Research, told MarketWatch.

The Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, “reduced inventories to relatively low levels at a time when economic growth and oil demand were robust,” he said. That, combined with the loss of oil production and refinery output in the U.S. due to Hurricane Ida, which reached the U.S. Gulf Coast in late August, tightened markets, he said.

However, “it seems likely that even without renewed outbreaks of COVID, supply will outpace demand early in the New Year,” said Lynch.

For now, traders awaited the latest decision on oil production by OPEC+ at its meeting on Thursday. At its meeting in early October, the group decided to keep its current plan in place to gradually raise output each month by 400,000 barrels a day.

Read: OPEC+ needs to ‘thread the needle’ between higher oil prices and losing market share

“I don’t think OPEC+ will change their plans at the next meeting, which will be bullish in the short term,” Lynch said.

On Friday, West Texas Intermediate crude for December delivery
CL00,
+0.72%

CLZ21,
+0.72%

rose 76 cents, or 0.9%, to $83.57 a barrel on the New York Mercantile Exchange. The U.S. benchmark suffered a 0.2% weekly fall, ending a nine-week streak of gains, the longest ever for front-month contracts, based on records data back to April 1983, according to Dow Jones Market Data.

For the month, WTI crude was up more than 11% after settling earlier this week at a more than seven-year high.

December Brent crude
BRNZ21,
+0.07%
,
the global benchmark, tacked on 6 cents, or nearly 0.1%, at $84.38 a barrel on ICE Futures Europe. The front-month contract, which expired at the end of the session, fell 1.3% for the week, but climbed 7.5% for the month. January Brent
BRN00,
+0.13%

BRNF22,
+0.13%
,
the most actively traded contract, rose 6 cents, or almost 0.1%, to $83.72 a barrel.

“The sharp rise in U.S. crude oil stocks and the expectation of nuclear talks being resumed with Iran have temporarily eased concerns about supply to some extent, leading to profit-taking,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note. “This does nothing to change the tight market situation, however.”

The Energy Information Administration on Wednesday reported that U.S. crude inventories rose 4.3 million barrels last week.

Also Wednesday, Iran indicated that it plans to resume talks on the Joint Comprehensive Plan of Action, known as the Iran nuclear deal, which could pave the way for the removal of U.S. sanctions that were reimposed by the Trump administration after it pulled Washington out of the agreement in 2018.

Read: U.S. issues Iranian drone program with new sanctions ahead of nuclear talks meeting

Futures for the petroleum products finished Friday on a mixed note, with the November contracts expiring at the end of the session. November gasoline
RBX21,
+0.37%

added 1.1% to $2.462 a gallon, down 0.8% for the week, but up over 9% for the month. November heating oil
HOX21,
-1.16%

fell 0.8% at $2.496 a gallon, ending 1.7% lower for the week, but notching a monthly climb of 6.6%.

Read: This city just recorded the U.S.’s highest-ever average gasoline price

Despite the rise in overall U.S. crude inventories last week, supplies in Cushing, Okla., the delivery hub for Nymex futures, continued to fall and were on pace to empty tanks by the end of the year, analysts said.

Read: Why oil traders say this key crude delivery point looks ‘basically empty’

Also see: Baker Hughes data show a slight weekly uptick in U.S. oil-drilling rigs

The OPEC+ Joint Technical Committee met on Thursday, ahead of the OPEC+ ministers meeting next week. One delegate told S&P Global Platts that the technical meeting went smoothly, and that “no major changes in [the] demand and supply picture” came up.

Bloomberg reported that the committee delegates said the global oil-supply deficit will be 300,000 barrels a day on average in the fourth quarter — smaller than the 1.1 million barrel daily shortfall shown in figures initially presented to the panel.

In other Nymex trading, natural-gas futures turned lower for the week after falling sharply Friday and Thursday on news Russian President Vladimir Putin told Gazprom to ship more natural-gas westward to European customers.

It is weather that will determine the next move in natural gas “as a cold start to the winter draw season could see prices continue to grind higher on bullish supply concerns, while more moderate temperatures will see stockpiles continue to rebuild in the weeks ahead,” said Tyler Richey, co-editor at Sevens Report Research.

December natural gas
NGZ21,
-4.57%

lost 6.2% to $5.426 per million British thermal units, with front-month contract prices down 0.6% for the week, losing 7.5% for the month.

Also see: Feeling fleeced by pricy filets? Meat, fruit and oats lead the drought-driven surge in food costs

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