The US ground Opec’s oil rally to a halt this week.
Crude futures limped to a 2.6% weekly loss on Friday, capping a volatile five days that began with President Donald Trump urging Opec to rein in prices and ended with US economic data that further undermined investor confidence.
In between, Saudi Arabia’s insistence that producers will stick to their supply cuts wasn’t enough to avoid the damage.
Weaker-than-expected reports on factory orders and consumer sentiment ended a three-day reprieve for crude markets. Many investors were already looking to lock in profits after prices had rallied more than 30% since late December, said Kyle Cooper, a consultant at ION Energy in Houston.
“It very easily could be a reason to pull back, especially after the ride crude has been on,” Cooper said by telephone.
A gauge of US factories fell to a two-year low in February, while US consumer sentiment also declined unexpectedly, according to two reports released on Friday. Further evidence of a slowdown in the US shale boom, with drilling activity at a 9-month low, did little to dispel the bearish mood.
With the “supportive narrative” from supply cuts already accounted for, “we suspect that the market will once again shift its gaze toward the demand side,” Bart Melek, head of commodity strategy at TD Securities, said in a note to clients.
WTI for April delivery fell $1.42 cents to $55.80 on Friday on the New York Mercantile Exchange. Brent for May settlement slid $1.24 cents to $65.07 a barrel on the London-based ICE Futures Europe exchange.
Oil ended 2018 in a tailspin on fears of a global oversupply but stormed back this year as Opec, Russia and other top exporters agreed to curb production. While a Trump tweet calling for lower oil prices knocked more than 3% off West Texas Intermediate futures on Monday, crude had clawed back from that loss through the middle of the week after the group showed no signs of reversing course.
Opec crude production fell by 560,000 bpd to 30.5mn a day last month, according to a Bloomberg survey, making the group fully compliant with the cuts it promised.
Opec crude production fell by 560,000 bpd to 30.5mn a day last month, according to a Bloomberg survey
