Oil futures trading in New York City and London continued to climb on Friday following a week of strong price action, with the Brent crude international benchmark briefly touching its highest level in two months.
Brent futures expiring in June were headed for their biggest weekly gain in six (on a continuous basis), while West Texas Intermediate crude futures, considered the main North American benchmark, were on track to post their fifth weekly gain in a row (again, on a continuous basis).
WTI CL00, -0.56% rose 3.4% to $114 a barrel, while Brent BRN00, -0.46% rose 3% to $117 a barrel.
A team of commodities analysts from Commerzbank recently raised their oil-price forecast for each of the next three quarters due to the growing likelihood that the EU will agree on an oil embargo on Russian oil.
This will increase demand for non-Russian oil, which should support prices for WTI and Brent.
However, they believe the oil market would see the balance between supply and demand reach an equilibrium during the second half of the year despite lingering supply risks, which is why the team expects oil prices to slide back below $100 per barrel during the second half of 2022.
After being squeezed higher to start the year, the oil market has calmed down noticeably in past weeks. In early March, shortly after Russia’s invasion of Ukraine, the price of Brent oil had risen to almost $140 a barrel, marking a 13½-year high.
Natural gas prices retreated on Friday after touching their highest level since 2008 earlier this week, following the release of Energy Information Administration inventories data which showed a sharp contraction in stockpiles.
Natty gas futures NG00, -3.84% were down 3%, or 27 cents, to trade at $8.62 per million British thermal units on Friday, although they remained up nearly 200% on the year, an increase that far outpaces the rise in crude oil. Diesel, which has also been trading near multi-year highs, retreated 0.9% to $3.82 per gallon.
As the U.S. Memorial Day Weekend marks the start of the summer driving season, the next near-term catalyst for energy markets is expected to arrive next week when oil ministers who are members of the Organization of Petroleum Exporting Countries, as well as representatives of countries like Russia which have more recently aligned themselves with OPEC, will hold a virtual meeting to discuss production plans. The meeting comes amid heavy pressure from Washington to increase production caps.
Add Comment