Amid a landscape of escalating tensions in the Middle East, crude oil sustained an upward trajectory on Friday, securing a fourth consecutive week of gains out of the last five. This remarkable resilience comes despite formidable challenges and discouraging headlines encountered along the way.
Volatility in Demand and Supply Dynamics
Throughout the week, the industry witnessed a substantial 12M-barrel surge in U.S. stockpiles – the most significant weekly increase since November – as reported by the IEA. Meanwhile, the IEA also issued warnings about the deceleration of global oil demand growth and escalating supplies outside OPEC+, amidst unexpectedly high U.S. inflation figures that bolstered the dollar and diminished prospects for an imminent rate cut from the Federal Reserve.
A larger-than-anticipated downturn in U.S. retail sales offered a glimmer of hope for rate cuts. Yet, economists cautioned that the results were likely dampened by an extreme cold spell in mid-January.
Bloomberg’s Grant Smith highlighted that time spreads for both WTI and Brent benchmarks are indicating tight conditions. This observation led him to believe that the market is poised to sustain current prices, unless confronted with a substantial supply shock.
Bullish Market Sentiment
Historical data suggests that oil prices typically exhibit a modest uptick of 1.4% in Q1. However, the current quarter has seen gains of approximately 5.5% thus far, outperforming the 10-year average. Notably, bullishness is gaining momentum among esteemed oil market analysts. Standard Chartered has opined that Brent prices should surpass $90/bbl, given the marginal growth in oil inventories last month. J.P. Morgan anticipates a further $10 climb in oil prices by May, while Morgan Stanley has raised its price forecast on account of surprisingly stringent market conditions.
Market Performance and Outlook
Front-month Nymex crude (CL1:COM) for March delivery concluded the week with a 1.5% rise on Friday, settling at $79.19/bbl, marking its highest value since November 6. Concurrently, front-month April Brent crude (CO1:COM) also recorded a 0.7% increase, reaching $83.47/bbl. WTI displayed a 3% surge over the week, while Brent experienced a 1.5% ascent.
Conversely, U.S. natural gas (NG1:COM) suffered a setback, declining for the fourth time in five weeks. The commodity ended the day with a 1.7% increase, yet witnessed a substantial 12.9% dip over the week, closing at $1.609/MMBtu, its second lowest settlement this year.
Market Indices and Top Performers
ETFs such as (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI), (UNG), (BOIL), (KOLD), and (UNL) have all exhibited significant market activity over the past week. The Energy Select Sector SPDR (NYSEARCA:XLE) closed the week with a 1.5% increase.
The past five days have seen a substantial fluctuation in energy and natural resource stocks, with some notable gainers and decliners. Fusion Fuel Green (HTOO) led the gainers with a remarkable surge of 105.4%, followed by Verde Clean Fuels (VGAS) at 95.4%. Conversely, SSR Mining (SSRM) experienced a substantial decline of 48.6%, trailed by Fluence Energy (FLNC) at 14.6%.
Keeping a close eye on source data from Barchart.com will be crucial for investors and industry observers in navigating the dynamic landscape of energy and natural resources markets.