Oil posted its first weekly loss in a month after wiping out most of the gains stemming from a surprise OPEC+ production cut.
Brent crude has erased nearly all of the $7 it gained after the Organization of the Petroleum Exporting Countries and its allies blindsided markets with promises to cut output.
Global supplies are showing signs of growth with Russia’s crude exports rebounding above 3 million barrels a day last week, while in global fuel markets, gasoline and diesel are slowing in a at which point they should increase or peak. Asian refiners are considering cutting volumes as margins have weakened recently, indicating that refiners failed to pass on higher costs to consumers.
“Some of the excitement over the OPEC+ cuts seems to have faded, amid light flows,” said Emily Ashford, executive director of energy research at Standard Chartered.
Technical indicators also affected prices. The US benchmark failed to break above its 200-day moving average last week and has been trading lower ever since. The $7 jump in prices after the OPEC+ announcement created a so-called chart gap, which led to a downward corrective move to fill the large price breakout.
In March, oil hit a 15-month low after banking turmoil shook confidence across markets.
The combination of OPEC+’s surprise announcement of production cuts, along with a reduction in Iraqi flows, pushed oil back into the $80s. Many market watchers are still betting on a pick-up in demand from China, which grew its economy at the fastest pace in a year, putting the country on track to meet its growth target.
Hedge funds increased their bullish bets on crude oil in the week ended April 18, increasing long positions in WTI and Brent to five-month and six-week highs, respectively.
Prices:
- WTI for June delivery rose 50 cents to settle at $77.87 a barrel.
- Brent for June settlement gained 56 cents to settle at $81.66 a barrel.
– With the assistance of Natalia Kniazhevich.
