Oil prices on Friday, July 14, soared in volatile trade as signs of strengthening demand was offset by still-high global stocks and concerns about economic growth.
Benchmark Brent and U.S. WTI crude oil contracts were on track for weekly gains, but fluctuated between intraday gains to losses amid conflicting signals on the supply-demand picture.
Brent crude futures, the international benchmark for oil prices, were up 45 cents, or 0.9 percent, at $48.87 per barrel at 12:12 p.m. (1612 GMT). U.S. West Texas Intermediate (WTI) crude futures rose 40 cents, or 0.9 percent, $46.48.
“It’s been a jumpy Friday in the oil market,” said Ole Hansen, head of commodity strategy with Saxo Bank, adding that the volatility was “primarily driven by traders covering what up until recently was an extended short position.”
The oil market could stay quite volatile: Russia’s Elvira Nabiullina The oil market could stay quite volatile: Russia’s Elvira Nabiullina
Prices spiked earlier in the day following a force majeure declaration on exports of Nigeria’s Bonny Light crude, but sank into negative territory after data showed U.S. retail sales unexpectedly fell in June, casting doubt on demand in the world’s largest oil consumer.
Both contracts were roughly 5 percent above the week’s lows, aided by reports of accelerating demand growth from the International Energy Agency, crude oil import growth in China and falling crude stocks in the United States.
China’s crude oil imports over the first six months of 2017 were 13.8 percent above the same period in 2016, customs data showed. Asian traders are selling oil products out of tanks amid soaring demand, while the EIA reported the largest drop in U.S. crude oil inventories in the week to last week in 10 months.
Analysts at Commerzbank said a reduction in the developed world’s oil stocks was likely to continue “so long OPEC does not significantly increase its output any further.”
Still, oil stocks remained comfortably above the five-year average, and prices are more than 16 percent below their 2017 highs, despite an extension to March 2018 of output cuts of 1.8 million barrels per day (bpd) coordinated by the Organization of the Petroleum Exporting Countries.
Crude prices are around levels in late November last year, when a group of oil producers including Russia and OPEC pledged to withhold around 1.8 million barrels per day (bpd) of output between January this year and March 2018 to tighten the market.
OPEC’s rebalancing effort has been stymied in part by rising output from Libya and Nigeria, which were exempt from cuts and were producing close to 700,000 bpd more than at the time of the initial November OPEC cut agreement, according to U.S. investment bank Jefferies. Despite force majeure, Bonny Light exports continued via a second pipeline.