Oil Caps Weekly Gains as Investors Perk Up on State of Market

(Bloomberg)

Oil edged higher for a fifth day amid optimism that the market isn’t in such bad shape.

Futures climbed 1 percent in New York Friday, pushing prices to a weekly gain of 5.2 percent. The International Energy Agency said that demand is climbing faster than initially estimated, and the U.S. government reported declining stockpiles last week. Kuwait’s OPEC governor said crude inventories will drop at a faster pace. Meanwhile, Royal Dutch Shell Plc was forced to curb flows of crude from Nigeria after a pipeline shut.

“There were certainly some bullish elements in the market this week for the first time it seemed like in a while,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. The IEA saying that supply is a problem, yet demand is picking up was “a pillar of strength that we hadn’t gotten in a while.”

While oil rallied this week, prices in New York have lingered below $50 a barrel amid concerns that elevated global supplies will offset cuts by the Organization of Petroleum Exporting Countries and its partners as part of a deal to help rebalance the market. The group’s output climbed last month to the highest this year as members exempt from the deal — Nigeria and Libya — pumped more and others slipped in delivering their pledged curbs.

West Texas Intermediate for August delivery added 46 cents to settle at $46.54 a barrel on the New York Mercantile Exchange, the highest close since July 3. Total volume traded was about 19 percent above the 100-day average.

Brent for September settlement climbed 49 cents to end the session at $48.91 a barrel on the London-based ICE Futures Europe exchange. Prices are up 4.7 percent this week. The global benchmark traded at a premium of $2.16 to September WTI.

Gasoline futures for August delivery rose 2.3 percent to settle at $1.5605 a gallon, the highest since June 2.

Shell’s Nigerian unit declared  force majeure, a legal clause enabling the suspension of deliveries, on flows of the country’s Bonny Light exports following the shutdown of the Nembe Creek Trunk Line. Both Bonny Light and Djeno, two West African grades that have been put under force majeure in recent days, were scheduled to ship almost 403,000 barrels a day this month, loading programs compiled by Bloomberg showed.

Shale drillers in the U.S. added 2 oil rigs for a total of 765, Baker Hughes Inc. data showed Friday.

OPEC and non-OPEC nations are showing greater compliance to their agreement to cut production and the deal is “working well,” Haitham al-Ghais, Kuwait’s OPEC governor, said.

The IEA raised estimates for global oil demand growth in 2017 by about 100,000 barrels a day to 1.4 million, the strongest in two years. U.S. crude inventories slid by 7.56 million barrels last week, the most since September, data from the Energy Information Administration showed Wednesday. Gasoline supplies and stockpiles at Cushing, Oklahoma, the nation’s biggest oil-storage hub, also declined.

The rise in prices this week is also a “reflection of some relatively bullish inventory draws,” Stewart Glickman, an energy equity analyst at CFRA Research in New York, said by telephone. “We’re in the $46 range. It’s nothing to write home about exactly, but it’s certainly better than $42.”

Oil-market news:

Magellan Midstream Partners LP plans to resume normal operations on its Longhorn crude pipeline early next week, the company said in a statement. OPEC would hurt itself and help U.S. shale producers if it adopted deeper cuts, the former oil minister of Qatar warned.