Oil futures: Brent rallies $3/b, possible storm formation in Atlantic

Quantum Commodity Intelligence – Crude oil futures Friday were trading higher on the day after a week of volatile price movements, clawing back the week's losses, while a potential storm forming in the Atlantic sent a timely reminder that the Hurricane season is here. 

Front-month August ICE Brent futures were trading at $113.08/barrel (2015 GMT), compared to Thursday’s settle of $110.05/b and $113.12/b at last Friday's settle.

At the same time August NYMEX WTI was trading $107.57/b, versus Thursday’s settle of $104.27/b and last Friday's close of $107.99/b. 

Warnings from the US Federal Reserve this week that continued rate hikes will be needed to tackle inflation added to recession fears and proved a drag on markets, while Europe gas shortages could hamper the industrial sector moving forward.

But for oil markets specifically, the tight supply/demand balance and record cracks for transport fuel continued to lend support.

“It’s been quite the correction in oil with all the talk of recession proving to be the counterforce to a tight market,” said Craig Erlam, senior market analyst at Oanda, noting that traders have seen this week's dips as buying opportunities.

Warren Patterson of ING echoed similar sentiments: "It has been a week of pressure for the oil market. The move lower in oil appears to be almost exclusively driven by macro influences, while oil fundamentals still remain supportive."

Investors were left without EIA inventory figures this week after what was believed to be a power outage caused the loss of some key data, although the government agency said numbers for the week ending 17 June will likely be published early next week.

Meanwhile a tropical wave over the Atlantic Ocean has a 50% chance of developing into a storm next week, according to the US National Hurricane Center, with a number of tracking models putting any potential storm on course for the US Gulf.  

"Environmental conditions appear conducive for development over the next few days, and a tropical depression could form by early next week as this system moves westward at around 15 to 20 mph over the tropical Atlantic," said the NHC in its latest bulletin.

The area of interest has been labelled Invest 94L, assigned by the NHC when a system becomes an ‘investigative area’.

In other late news Friday, OPEC will hold its own meeting on June 29, one day prior to the wider OPEC+ meeting.