Oil futures fell Friday as choppy trading continued in the wake of an extension to OPEC production curbs and ongoing tensions in the Middle East.
Futures prices were unable to extend Wednesday’s gain, which came as U.S. government data showed domestic crude supplies fell a third straight week, but by a lot less than the market expected. U.S. markets were closed Thursday for the Independence Day holiday.
Investors in risk-on markets, including oil and U.S. stocks, were tuned in to a June hiring report due out Friday morning and any implications it may have for an expected interest-rate hike at the end of the month, as well as the overall economic picture.
In early trading, August West Texas Intermediate crude CLQ19, -0.96% fell 49 cents, or 0.9%, at $56.85 a barrel on the New York Mercantile Exchange.
International benchmark September Brent BRNU19, +0.28% added 21 cents, or 0.3%, at $63.51 a barrel on ICE Futures Europe.
Read: Here are the best- and worst-performing commodities in the first half of 2019
Global economic worries have led to choppy trading in oil markets after futures prices gained modestly to start the week when Venezuela’s oil minister Manuel Fernandez said the Organization of the Petroleum Exporting Countries will extend its production-cut agreement by nine months through March 2020. The OPEC decision came as officials there keep close tabs on the risk to demand from global trade tiffs and as tensions percolate between Iran and the West.
“The main reason that we have not seen any surge in the oil prices is mainly due to protectionism policies by President Trump. Protectionism has been the biggest denominator, in fact, this particular factor has been more dominant than the supply,” said Naeem Aslam, analyst with Think Markets. “This is the reason that why we have not seen any serious surge in the price despite the fact oil tankers are being attacked in the Middle East.”
With tensions heightened, an Iranian Revolutionary Guards commander threatened on Friday to seize a British ship in retaliation for the capture of an Iranian supertanker in Gibraltar by Royal Marines. “If Britain does not release the Iranian oil tanker, it is the authorities duty to seize a British oil tanker,” Mohsen Rezai said on Twitter.
OPEC oil production hit a new five-year low in June as a rise in Saudi supply did not offset losses in Iran and Venezuela due to U.S. sanctions and other outages elsewhere, a Reuters survey found.
Read: OPEC, allies waging a battle to keep oil prices supported amid trade tensions
The Energy Information Administration on Wednesday reported that U.S. crude supplies declined by 1.1 million barrels for the week ended June 28. Analysts polled by S&P Global Platts expected a greater fall of 3.7 million barrels in crude stocks, on average. The American Petroleum Institute on Tuesday reported a 5 million-barrel decline.
Separate data from Baker Hughes BHGE, -0.04% also released Wednesday ahead of the usual release Friday, revealed that the number of active U.S. rigs drilling for oil fell by 5 to 788 this week. That followed two consecutive weeks of increases.
As for other sections of the market, the EIA data also showed that gasoline inventories were down 1.6 million barrels, while distillate stockpiles edged up by 1.4 million barrels last week. The S&P Global Platts survey had shown expectations for supply declines of 2.4 million barrels for gasoline and 1.4 million barrels for distillates.
Rounding out trading, August gasoline US:RBN19 fell 2 cents, or 1.3%, to $1.8914 a gallon. August heating oil US:HON19 fell 2 cents, or 0.8%, to $1.8828 a gallon.
Read: Gasoline prices are on the rise—just as drivers gear up for the Fourth of July
August natural gas US:NGN19 gained 2 cents, or 1%, to $2.314 per million British thermal units.
The EIA reported Wednesday that domestic supplies of natural gas rose by 89 billion cubic feet for the week ended June 28. The data, which were released a day earlier than usual because of Thursday’s Independence Day holiday, were expected to show a build of about 80 billion cubic feet, according to Schneider Electric.
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