Oil futures were drifting lower on Friday, and set to end the week with modest gains as the market remains caught between demand and supply issues. Bigger losses were seen for natural-gas prices.
West Texas Intermediate crude for the most active July contract
fell 42 cents, or 0.3%, to $109.46 a barrel, after closing up 2.7% to $109.89 a barrel. June crrude
was down 0.2% to $111.94 cents after closing up 2.4%.
rose 1.5% to $3.808 a gallon,
June natural-gas futures NGM22, -3.39% declined 0.7% to $$8.308 per million British thermal units.
Crude oil prices is set to end the week with a gain of just over 1%, with Brent looking at a gain of around 0.8%.
“Crude oil remains rangebound, caught between focusing on tight monetary policy driving an economic slowdown and a tightening global fuel-product market,” said Ole Hansen, head of commodity strategy at Saxo Bank, in a note to clients.
He added that that’s a situation that could get worse once China manages to lift lockdowns which has battered its economy and cut demand for commodities overall. Crude got a boost earlier in the week after the world’s biggest oil importers began easing up on its Shanghai lockdown.
Asian stock markets and U.S. equity futures got a lift on Friday after China’s central bank cut its rate on five-year loans, but even amid a prospect for slower economic growth, crude prices remain supported, said Hansen.
“China’s import of cheap Russian crude rose to a three-month high in April as the country sent about 2 million barrels per day of crude oil into storage tanks. The mentioned tightness in global fuel products will underpin fuel prices, already at record levels around the world, ahead of the summer driving season,” he noted.
Natural-gas futures were under pressure, but still clinging to a weekly gain of nearly 4%.
Hansen noted that prices of the commodity are 200% higher versus a year ago, owing to record exports via LNG, flat production growth and a recent U.S. heat wave in the southern belt.
He said a weekly injection of 89 billion cubic feet (bcf) to 1732 bcf was in line with expectations and helped trim the deficit to the 5-year average of 15.2%.
Expected milder weather and some temporary “LNG indigestion could suggest a period of stable prices, but overall rising global demand and a sharp discount to prices in Europe and Asia is likely to prevent any significant weakness during the coming months,” said Hansen.