In This Article:
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures closed higher last week and in a position to do more upside damage this week. Both contracts hit new five-month highs in the process. Furthermore, the markets are seeing increased buying from the hedge and commodity funds now that they have crossed to the strong side of the 200-Day Moving Average.
Last week, May WTI crude oil futures settled at $63.08, up $2.94 or +4.89% and June Brent crude oil futures finished at $70.34, up $2.76 or +3.92%.
The bullish theme continued last week with prices primarily underpinned by the highly successful OPEC-led production cuts that have trimmed the global supply glut while stabilizing prices. Additional support is being provided by the U.S. sanctions against Iran and Venezuela.
The news over the sanctions against Iran intensified last week when the U.S. said it was reducing the number of waivers, while increasing economic pressure on the rogue nation.
U.S. economic news was mixed last week but the stronger-than-expected U.S. ISM Manufacturing PMI report may have been enough to dampen worries over a U.S. economic slowdown pressuring demand. Friday’s mixed jobs report also reduced those concerns, driving prices higher.
Bullish traders also received a gift in the form of an escalating conflict in Libya that could tighten crude oil supplies. According to reports, Eastern Libyan commander Khalifa Haftar ordered his troops on Thursday to march on the capital Tripoli, escalating a conflict with the internationally recognized government.
Other News
U.S. energy firms last week increased the number of oil rigs operating for the first time in seven weeks. Companies added 15 oil rigs in the week to April 5, the biggest increase since May 2018, bringing the total count to 831, General Electric’s Baker Hughes energy services firm said in its closely followed report on Friday.
China was also in the news last week. First, better than expected manufacturing PMI data helped dim worries about lower demand. Second, optimism that the U.S. and China are close to ending their trade dispute also helped underpin prices.
Weekly Forecast
Prices could rally early next week on the back of a report from Platts, released over the week-end. According to the report, “OPEC in March tightened the oil market considerably, slashing 570,000 b/d from its February output level, as Saudi Arabia continued to implement production cuts and Venezuela suffered from extensive power outages on top of US sanctions.”
“The 14-country bloc pumped 30.23 million b/d in the month, the lowest in more than four years, with crisis-hit Venezuela contributing most to the decline.”