Oil recorded its first weekly loss in a month after erasing most of the gains stemming from OPEC+’s surprise output cut.
Brent crude wiped out almost all of the US$7 that it gained after OPEC and its allies blindsided markets with a pledge to cut production.
Brent crude for June delivery rose 0.69 percent to US$81.66 a barrel on Friday, but posted a weekly decline of 5.39 percent.
Photo: Reuters
West Texas Intermediate for May delivery gained 0.65 percent to US$77.87 a barrel, dropping 5.63 percent from a week earlier.
Global supplies are showing signs of growth with Russia’s crude exports bouncing back above 3 million barrels a day last week, while in global fuel markets, gasoline and diesel are slowing at a time when they should be increasing or peaking.
Asian refiners are considering cutting volumes as margins have weakened recently, signaling that refineries did not manage to pass on higher costs to consumers.
“It appears that some of the excitement around the OPEC+ cuts has faded, amid light flows,” Standard Chartered PLC executive director of energy research Emily Ashford said.
Technical indicators also took a toll on prices. The US benchmark failed to break through its 200-day moving average last week and has been trading lower ever since.
The US$7 jump in prices after the OPEC+ announcement created a so-called chart gap, which then prompted a corrective move to the downside to fill the large break in prices.
Last month oil hit a 15-month low in the aftermath of bank turmoil that shook confidence across all markets. The combination of the surprise announcement by OPEC+ on production cuts coupled with a reduction in Iraqi flows pushed oil back into the US$80 range.
Many market watchers are still betting on a rebound in demand from China, which grew its economy at the fastest pace in a year, putting the country on track to reach its growth goal.
Additional reporting by staff writer
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