Oil futures on Friday tallied modest losses for the day and week as prices failed to reestablish their hold on the $96-a-barrel level.
Traders mulled the outlook for energy demand and kept watch on developments tied to a key U.S. pipeline, which cut back on its oil deliveries this week.
Crude oil for March delivery shed 7 cents, or 0.1%, to settle at $95.88 a barrel on the New York Mercantile Exchange.
Prices, which gained 72 cents on Thursday, finished 0.2% lower than a week ago. That was the first weekly loss in seven weeks.
“The $96-per-barrel price for West Texas [Intermediate crude] was a bit lofty when it settled [there] a week ago, and it hasn’t gone anywhere since,” said Richard Hastings, a macro strategist at Global Hunter Securities.
But it would be “difficult to get negative on oil prices right now, with a nice combination of a strong euro, a variety of constraints and tensions within a few of the key OPEC members, better export data in the U.S. and very stable demand signals overall,” he said.
Friday’s moves came after the German Ifo business-climate index rose to a better-than-expected 104.2 in January, signaling that the country may be out of a widely-suspected fourth-quarter contraction.
U.S. economic data, however, were disappointing. Sales of new single-family homes fell 7.3% in December to a seasonally adjusted annual rate of 369,000. Economists polled by MarketWatch forecast sales of 385,000.
Many fundamentalists are calling for a big down move in oil due to massive U.S. production,” said Jason Rotman, president of Lido Isle Advisors in Newport Beach, Calif. However, “we believe oil could continue to slowly but surely trade higher in the short-term seasonal bullish pattern, then potentially start to trade much lower into the summer.”
Seaway impact
Oil prices had seesawed this week, with Phil Flynn, senior market analyst at Price Futures Group, blaming the action on the “continuing saga surrounding the Seaway Pipeline.”
The reversal of the key U.S. pipeline last year was “seen as a major step forward in taking advantage of the new boom in U.S. oil and Canadian [oil] sands production and alleviating the record glut at the storage terminals in Cushing, Okla.,” the delivery point for Nymex oil futures, said Flynn.
The oil market had blamed the supply glut at Cushing for the growing spread between two of the world’s benchmark oils: West Texas Intermediate traded on Nymex and Brent traded in London.
On Friday, March Brent North Sea crude finished Friday unchanged at $113.28 a barrel on ICE Futures for a gain of more than 1% for the week.
Capacity on the Seaway pipeline was expanded this month to 400,000 barrels per day from 150,000 barrels.
But on Wednesday, oil prices saw their biggest one-day drop in over a month after Enterprise Products Partners said it cut its Seaway pipeline oil deliveries by more than half, as a refinery in Texas, undergoing maintenance, reduced demand.
The problem is raising a bigger issue with some,” said Flynn. “Is it possible that even the Gulf Coast does not have the infrastructure and storage to handle our new oil boom?”
Meanwhile, another pipeline, TransCanada Corp.’s Keystone XL pipeline, awaits approval.
U.S. data released Thursday showed a bigger-than-expected rise in crude inventories, along with a surprise decline in gasoline stocks.
“Optimism that eventual economic growth will boost petroleum demand continues to dominate market sentiment, but we see clear risks to this view,” said Tim Evans, an analyst at Citi Futures, in a note. “Even with a pickup in consumption there’s the possibility that supply growth will simply outpace demand.”
Among other energy futures, February gasoline settled at $2.875 a gallon, up 1 cent, or 0.4%, for a 2.8% gain on the week.
Heating oil for the same month closed down 3 cents, or 1%, at $3.06 a gallon, ending 0.1% higher for the week.
February natural gas settled near flat Friday at $3.44 per million British thermal units. It was down 3.4% from a week ago.
Marketwatch
