Oil futures: Prices rebound 4%, helps limit steep weekly losses
Quantum Commodity Intelligence – Crude oil futures Friday were sharply higher but still heading for steep weekly losses after concerns over the economy and broader macroeconomics dominated recent trading sessions.
Jul23 ICE Brent futures were trading at $75.40/b (1825 GMT), compared to Thursday's settle of $72.50/b, but around 6% lower on the week having been on course for double-digit percentage losses on Wednesday.
At the same time, Jun23 NYMEX WTI was trading $71.44/b versus Thursday's close of $68.56/b and a weekly loss of 7%.
WTI had slumped well below $70/b this week, even without Thursday’s ‘flash crash’, a level US officials had previously stated it would be interested in buying oil at to restock the SPR, but any purchases are expected to be after the summer when maintenance at two caverns has been completed.
Fundamentals, which had taken a back seat this week, have slowly come back into play after OPEC+ officials confirmed its 4 June policy meeting will be an in-person event in Vienna, helping shore up prices Friday.
This will be the first gathering since October, when the group announced a controversial 2 million bpd headline cut, and could be a signal the group is prepared to take further action to support prices.
Meanwhile, Adnoc has informed customers it will reduce term volumes for this month by 5% as Middle East producers roll back on output, which comes after some OPEC+ members announced further cuts from May, including around 1 million bpd from the Gulf region.
Stabilised
Markets stabilised after Wednesday's 25 basis point US rate hike was announced on hopes the current rate-hike cycle will be paused, but oil initially remained under pressure as concerns over the regional banking crisis and Federal debt levels linger on.
Phil Flynn of The Price Futures Group noted PacWest was the latest bank to face scrutiny after shares plummeted 50% on Thursday, joining Silicon Valley Bank, Signature Bank and First Republic as troubled assets.
"Now reports that Toronto-Dominion Bank and First Horizon have agreed to terminate their merger agreement is raising even more concerns about bank stability," said Flynn, noting that the regional banking crisis will likely force the Federal Reserve to pause further rate hikes "unless inflation data gets crazy".
Europe's decision to slow the pace of tightening and match the Fed with a 25 basis points rise to 3.25% was largely brushed aside.
Products remained a drag on crude this week, as ICE gasoil futures show a contango market structure across the first six contracts for the first time in two years.
It marks a dramatic turnaround for the distillate market, which had been in steep backwardation for much of the last 15 months as Russia's war in Ukraine threatened to throttle supply to its biggest market – Europe.
