New York —
Crude futures ended the week mixed after a volatile session Friday.
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ICE November Brent settled 9 cents lower at $78.09/b while NYMEX October WTI closed 40 cents higher at $68.99/b. Both contracts closed well below their intraday highs, which were $69.91/b for WTI and $78.94/b for Brent.
The oil complex had rallied from early session lows during late morning trading on the back of expectations that the White House could issue new sanctions against Iran later on Friday. But the rally was short-lived and futures gave back most of these gains as news of a possible escalation in the trade dispute between the US and China weighed on buyer enthusiasm instead.
Reports the Trump administration could increase tariffs on Chinese goods increased market concerns that long-term economic growth, and by extension oil demand, may be lower than expected. “Demand growth continues to play a supportive role in markets,” said Tradition Energy analyst Gene McGillian. “[The market] is watching trade wars and emerging markets to see if there is any impact in energy demand.”
The news came at the same time as administration officials have been working to restart trade talks with Beijing.
“Even though there are new [trade] talks between the US and China there seems to be a little uncertainty coming with that as well,” said McGillian. “I think basically that has brought the market under a little bit of selling pressure at the end of the week.”
Meanwhile, Secretary of Energy Rick Perry announced Friday in Moscow that increased production from the US, Saudi Arabia, and Russia would keep the market balanced once Iranian exports are blocked by sanctions. Taken together, the actions were a mixed bag for markets, and crude prices fell in response.
But WTI was supported in part by the potential that Tropical Depression Isaac could move into the US Gulf of Mexico next week, said one analyst. The storm, which was located south of Puerto Rico and tracking westward on Friday, was forecast to begin turning to the northwest early next week.
Products futures also staged a late morning rally, but ended the session lower.
NYMEX October RBOB settled 2.27 cents lower at $1.9702/gal and NYMEX October ULSD settled 1.43 cents lower at $2.2092/gal.
October RBOB values peaked at $2.0000/gal during the session on the back of bullish demand reports.
“Consumer confidence is near an all-time high,” said Price Futures Group senior market analyst Phil Flynn. “That’s always bullish for gasoline.”
But the higher levels proved unsustainable in the face of a weakened Hurricane Florence and strong stock builds last week. Florence, which made landfall early Friday in North Carolina, had been forecast maintain category 2 hurricane status, but instead arrived as a weaker category 1 storm. The downgraded storm posed a lower risk to critical pipeline infrastructure in the region and instead would likely be a demand destruction event, said analysts. — Christopher Vanmoessner, firstname.lastname@example.org
— Edited by Keiron Greenhalgh, email@example.com