As crude oil futures climbed steadily for a fourth consecutive session, marking their first weekly gain in five weeks, the narrative centered around dwindling inventories, particularly in the U.S., and the looming risk premium associated with Middle Eastern tensions.
Amidst this backdrop, the news of a dip in first-time weekly U.S. jobless claims early in the week provided a much-needed reassurance to investors amidst concerns surrounding the labor market’s stability.
The surge in oil was further buoyed by China’s consumer price index, which surpassed expectations last month, hinting at an upward trajectory in oil prices. Analysts at ActivTrades, including Pierre Veyret, hinted at escalating geopolitical tensions in the Middle East potentially driving oil prices to test the $80 per barrel mark.
Front-month Nymex crude (CL1:COM) for September delivery closed the week with a 4.5% gain at $76.84/bbl, while front-month October Brent crude (CO1:COM) saw a rise of 3.7% to $79.66/bbl for the week.
Interestingly, front-month Nymex natural gas (NG1:COM) for September delivery also witnessed a 8.9% increase to $2.143/MMBtu, registering its first weekly rise in four weeks.
Executives at U.S. refiners announced a reduction in production volume for the current quarter, attributing it to persistently weak profit margins and scheduled maintenance turnarounds coinciding with the decline in summer fuel demand.
Tudor Pickering Holt analyst Matthew Blair underlined the industry’s move to run refineries at an average capacity of 95% earlier this year, leading to excessive gasoline stocks that favored consumers but dented profit margins. The strategic hope now lies in scaling back supply to potentially boost margins.
Major players like Marathon Petroleum (MPC), Valero Energy (VLO), and Phillips 66 (PSX) have unveiled their plans to operate refineries at reduced capacities in Q3, hinting at a revised approach compared to their Q2 performance.
The Energy sector, with the Energy Select Sector SPDR Fund ETF as its representative, emerged as the second-best stock market performer for the week, enjoying a 1.1% rise.
Notably, the top gainers in the energy and natural resources realm for the past five days included Indonesia Energy (INDO) at +41.5%, Eco Wave Power (WAVE) at +24.1%, and Pampa Energia (PAM) at +19.3%.
On the flip side, the top decliners in the same sector were led by NextDecade (NEXT) at -40.1%, and ProFrac Holding (ACDC) at -25.4%.
Source: Barchart.com
