Oil futures stretch gains to a 4th consecutive week
Natural-gas futures lose nearly 12% for the week
Oil futures finished modestly higher Friday, with prices extending their streak of gains to a fourth straight week amid ongoing signs of compliance with a global pact to cut production.
Still, traders have shown concern that the recent price gains for oil, which climbed nearly 9% in December, will spur increases among producers who aren’t part of the initiative, including the U.S. and Libya. That kept price gains for oil in check.
February West Texas Intermediate crude CLG7, -0.13% rose 23 cents, or 0.4%, to settle at $53.99 a barrel on the New York Mercantile Exchange, after trading as low as $53.32. It was roughly 0.5% higher for the week after posting gains in each of the previous three weeks, according to FactSet data.
The March contract for Brent crude LCOH7, -0.07% edged up by 21 cents, or 0.4%, to finish at $57.10 a barrel on the ICE Futures exchange in London, for weekly gain of about 0.5%.
Members of the Organization of the Petroleum Exporting Countries appear “to be off to a good start for compliance, based on indications from Kuwait,” Rob Haworth, senior investment strategist at U.S. Bank Wealth Management told MarketWatch.
Bloomberg reported on Friday that Kuwait is said to make bigger production cuts than required by the deal and The Wall Street Journal Thursday reported that Saudi Arabia has cut production by nearly 500,000 barrels a day since October.
But it will likely be a few weeks before we get good estimates from the International Energy Agency and Energy Information Administration on OPEC production cuts, Haworth said. OPEC plans to release its monthly oil report on Jan. 18 and the IEA’s monthly report is due the next day, but both would come just over two weeks after the output cuts officially began.
OPEC pledged to reduce production by 1.2 million barrels a day and other major producers promised a cutback of nearly 600,000 barrels a day.
Tyler Richey, co-editor for The 7:00’s Report, in a newsletter, referred to the output deal as “fragile…and if some OPEC members don’t comply, and Russia fails to make an effort to slow their production in Q1, Saudi Arabia will only ‘pick up the slack’ for so long before the whole thing falls apart.”
Other producers who aren’t part of the production curbs, such as OPEC members Libya and Nigeria, have been ramping up crude output.
“With output in Libya and Nigeria probably rising this month to some 700,000 barrels a day and 1.7 million barrels a day, respectively, we estimate that actual total OPEC output in January could be closer to 33.5 million barrels a day than to the official ceiling of 32.5 million barrels a day,” said consultancy FGE in a note.
Reuters reported Friday that Iran, which wasn’t obligated to reduce output, has sold more than 13 million barrels of oil it had long held on tankers at sea over the past three months.
“With rig counts growing, U.S. production is likely to continue its rebound,” said Haworth. “This will mitigate some of OPEC’s hoped for benefits from their promised production cuts.”
Oil prices managed to post a gain Thursday after the U.S. Energy Information Administration reported a significant weekly drawdown from crude stockpiles, but the data also showed a large growth in distillates and gasoline stocks.
Back on Nymex, natural-gas futures made the biggest percentage move of the week, with prices for the fuel posting a loss of nearly 12% from last Friday.
February natural gas NGG17, +0.31% rose 1.2 cents, or 0.4%, to $3.285 per million British thermal units Friday, but it still lost 11.8% for the week as warmer weather forecasts dulled the outlook for demand.
Also on Nymex Friday, February gasoline RBG7, -0.64% fell under half a cent to $1.634 a gallon, down about 2.2% for the week, and February heating oil HOG7, +0.21% ended at $1.703 a gallon, up just short of a penny for the session, but down about 1.5% for the week.
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–Kevin Baxter and Jenny W. Hsu contributed to this article.