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Futures Movers: Oil prices head for another strong weekly gain as supply worries dominate

Oil prices were higher on Friday and headed for another strong weekly gain, as supply worries returned to the fore.

Price action

West Texas Intermediate crude for June delivery 
CL.1,
+2.30%

CL00,
+2.30%

CLM22,
+2.30%

rose $2.36, or 2.5%, to $110.82 a barrel. The contract closed up 0.4% to $108.26 a barrel on Thursday on the New York Mercantile Exchange.

July Brent crude
BRN00,
+2.31%

BRNN22,
+2.31%
,
the global benchmark, rose $2.13, or 2.3%, to $113.26 a barrel. The contract finished up 0.7% to $110.90 a barrel on ICE Futures Europe on Thursday.

June natural-gas futures 
NGM22,
+1.91%

rose 1.5$ to $8.923 per million British thermal units. The contract jumped 4.4% to close at $8.783 per million British thermal units on Thursday, its highest finish since Aug. 1, 2008.

June gasoline 
RBM22,
+1.33%

rose 0.9% to $3.6915 a gallon, while June heating oil
HOM22,
+0.31%

 rose 0.6% to $4.068 a gallon.

Market drivers

Both West Texas Intermediate and Brent crude were poised for weekly gains of more than 5%, marking the third-straight weekly gain for each, according to FactSet.

The focus for the commodity has been “switching from the risk of slowing demand due to Chinese lockdowns and rate hikes, and back to supply which continues to tighten,” said Ole Hansen, head of commodity strategy at Saxo Bank, in a note to clients.

“OPEC+ announced another 432k barrels/day increase in oil production for June but with OPEC10 (those with quotas) trailing by 800k barrels/day in April and Russia and Kazakhstan being the other laggards, the group is currently not able to deliver the barrels they have targeted,” said Hansen.

“In addition, the EU ban on Russian oil imports and a surprise U.S. announcement about starting to refill its SPR [strategic petroleum reserves] already this autumn also underpinning the price,” he said.

In Brent, the next level of resistance is the April high around $115 with support at $110, he said.

Analysts said an upswing for oil on Thursday was curbed by the strong selloff for Wall Street stocks and dollar strength. The latter can serve as a headwind for dollar-priced commodities, making them more expensive compared than those based in other currencies.

Read: This trader predicted the bond meltdown, tech selloff and oil’s surge. She sees $260 oil within a year.

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