Futures Movers: Oil futures edge higher, eye a weekly loss of roughly 10%

United States

Oil futures inched higher on Friday, but look to end the week with a loss of more than 10% which would be the largest weekly loss for U.S. benchmark crude in more than eight months.

The shutdown of the Keystone Pipeline following news of a leak late Wednesday provided some support to the oil market, but of greater concern are worries about a global recession and lower crude demand from China.

Price action
  • West Texas Intermediate crude for January delivery CL00, +0.94%   CL.1, +0.94%   CLF23, +0.94% rose 92 cents, or 1.3%, to trade at $ 72.38 a barrel on the New York Mercantile Exchange. Prices based on the front-month contract traded 9.5% lower for the week, after settling Thursday at the lowest since Dec. 21, 2021, according to Dow Jones Market Data.
  • February Brent crude BRN00, +0.92%   BRNG23, +0.92%, the global benchmark, climbed by 92 cents, or 1.2%, to $ 77.08 a barrel on ICE Futures Europe. It settled Thursday at lowest since Dec. 24 of last year and trades almost 10% lower for the week.
  • Back on Nymex, January gasoline RBF23, +1.11% added 0.8% to $ 2.0656 a gallon, while January heating oil HOF23, -1.79% traded at $ 2.883 a gallon, up0.1%.
  • January natural gas was at $ 6.325 per million British thermal units, up 6.1%, building a gain of around 0.8% for the week.
Market drivers

The Keystone pipeline, which carries oil from Canada to the Texas Gulf Coast remained shut due to a 14,000-barrel oil spill in Kansas, Reuters reported Friday. “The pipeline is a major supplier to the Gulf Coast complex,” analysts at StoneX’s energy team in Kansas City, wrote in Friday’s report.

Oil prices had briefly moved higher Thursday on news of the pipeline shutdown, but finished that session at their lows of the year as pressure from oil demand worries outweighed support.

“Worries of a global recession have trumped hopes for China easing COVID restrictions and eventually reopening their economy, as monetary policy expectations have taken a hawkish shift,” analysts at Sevens Report Research said in Friday’s newsletter.

Also see: Why coal leads the rise in commodities this year

U.S. Labor Department data showed Friday that wholesale prices rose 0.3% in November. Economists polled by The Wall Street Journal has forecast a 0.2% gain. Although hotter than expected in November, inflation at the wholesale level is showing steady deceleration from the peak in March.

Separately Friday, the University of Michigan’s gauge of consumer sentiment rose to a preliminary December reading of 59.1 from a November reading of 56.8. Inflation expectations over the next year fell to 4.6% — the lowest since September 2021.

Still, the market is more focused on the U.S. consumer price inflation report due out Tuesday, the day before the Federal Reserve’s decision’s on interest rates. There have been concerns that if the Fed raises interest rates too quickly, that could lead the economy into a recession.

Oil prices are also sharply lower for the week, with traders “concerned that good days are gone for oil prices, when there were serious concerns about oil supply,” said Naeem Aslam, chief market analyst at AvaTrade, in a market update. “It seems like there is more than ample supply and the lawmakers in the United States are still encouraging oil drillers to pump as much oil as they can.”

Even so, major oil producers OPEC+ reduced their crude output by 700,000 barrels per day in November — the steepest monthly decrease since April, according to the latest Platts survey by S&P Global Commodity Insights released Friday.