Oil futures tipped higher Friday, still near a two-week low as investors assess the next leg for volatile stock markets and rising crude supplies continue to drive trading.
November West Texas Intermediate crude
rose 51 cents, or 0.7%, at $71.48 a barrel on the New York Mercantile Exchange. The global benchmark, Brent crude for December delivery
on the ICE Europe exchange gained 34 cents, or 0.4%, at $80.60 a barrel.
Both benchmarks shed some 3% Thursday, and Brent briefly dropped below the closely watched $80 line. They were moving in step with a two-day selloff across global stock markets—a severe move that raised some concerns about economic resiliency and eventual energy consumption. Global equities and early U.S. stock futures indicators pointed higher on Friday, however.
Overall, production data remain the overarching driver of market sentiment.
A monthly report from the Organization of the Petroleum Exporting Countries released Thursday revealed a rise in OPEC and Russian crude-oil production in September, more than making up for a continuing decline in Iranian output ahead of the implementation of U.S. sanctions on Iran’s oil industry. Earlier this week, the EIA boosted its forecast for U.S. oil production, which added another headwind.
OPEC lowered its global oil demand growth forecast for this year and next, the third month in a row for a downgrade.
On Friday morning, the International Energy Agency shared that view, saying global oil demand will grow at a slower pace than initially expected this year and next amid economic risks stemming from trade tensions and higher oil prices.
“At the heart of this softening oil demand backdrop are a myriad of downward pressures on the global economy,” said Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd. “They include rising trade tensions, Fed policy tightening, and emerging-market weakness.”
Back on the supply front, the Energy Information Administration reported Thursday that domestic U.S. crude supplies climbed by 6 million barrels for the week ended Oct. 5. The increase was much larger than the 1.61 million-barrel increase forecast by analysts surveyed by S&P Global Platts, but it was significantly below the climb of 9.7 million barrels reported by the American Petroleum Institute on Wednesday.
“Supply-side anguish has slinked into the equation as oil traders remain on the defense,” said Stephen Innes, head of trading APAC, at Oanda.
“Indeed, it’s hard to sugar coat this week’s inventory data, but for perpetual bulls like my self, if risk stabilizes around improving U.S.-China tension, there are some very cheap entry points on offer,” he said, noting support near and around $80 Brent.
As for other products, gasoline stockpiles also rose by 1 million barrels last week, while distillate stockpiles declined by 2.7 million barrels, according to the EIA. The S&P Global Platts survey had shown expectations for a supply rise of 422,000 barrels in gasoline and 1.71 million-barrel decline in distillates.
On Nymex, November gasoline
gained about 2 cents, or 0.9%, at $1.9499 a gallon. The contract dropped by 4.3% to $1.933 a day earlier—the lowest finish since March. November heating oil
rose 0.1% to $2.334 a gallon early Friday.
The EIA reported Thursday that domestic supplies of natural gas rose by 90 billion cubic feet for the week ended Oct. 5. That matched the increase expected by analysts polled by S&P Global Platts.
November natural gas
rose 1.1% to $3.258 per million British thermal units early Friday, nearing a revisit of the January highs hit midweek. It was trading at $3.193 before the supply data.
—Christopher Alessi contributed to this article
Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here.