Prices ready to extend win streak to six sessions on Egypt violence
By Myra P. Saefong and Barbara Kollmeyer, MarketWatch
SAN FRANCISCO (MarketWatch) — Oil futures edged up toward $108 a barrel on Friday as violence in Egypt continued to feed worries about supplies in the region, setting prices up to extend their climb to a six consecutive session.
Weaker-than-expected data on consumer sentiment, however, dented the outlook for energy demand, keeping a cap on oil’s gains.
Crude oil for September delivery CLU3 +0.46% tacked on 46 cents, or 0.4%, to $107.79 a barrel on the New York Mercantile Exchange.
Prices were trading around 1.7% higher for the week. They’ve tallied a gain of roughly 3.7% over the past five trading sessions, including a 2.5% climb last Friday.
October Brent crude UK:LCOV3 +0.47% traded at $110.10 a barrel on ICE Futures, up 50 cents, or 0.5%. The contract’s trading around 3% higher for the week.
“Violence in Egypt and limited exports from Libya remain the chief supply worries driving a still-widening geopolitical risk premium,” said Tim Evans, energy analyst at Citi Futures, in a note Friday.
The bloodshed in Egypt drew vows of support by the Muslim Brotherhood to continue their protests against the ousting of former President Mohammed Morsi, with demonstrations held Friday outside mosques across the nation.
The interim government had declared a state of emergency earlier in the week, though reports said the clampdown hadn’t affected traffic through the Suez Canal, a key oil transit hub, or flows through the Suez-Mediterranean pipeline.
But Kilduff Report analysts said Thursday that other supply issues loomed over both Nymex and Brent crudes in the near term.
“Looking ahead, when all the outages are added up for September and beyond, in terms of the North Sea, Libya, both Northern and Southern Iraq (work on the Basra export infrastructure), and the sanctions on Iran, the market could be out some 3.0 million barrels per day,” they wrote.
“Unfortunately, that is just too tall of an order for the American shale boom to fulfill. So despite the hopes of U.S. and other consumers, the hoped-for surfeit of crude oil on the global market will remain off in the distance,” Kilduff Report said, projecting a likely climb for Nymex crude to above $110 a barrel.
Economic data Friday offered a peak at the outlook for energy demand, though not a very clear one.
The preliminary August reading of the University of Michigan/Thomson Reuters consumer sentiment fell to 80.0 in August, down from 85.1 in July, according to reports.
But U.S. productivity rose at a 0.9% annual rate, compared with a forecast for a 0.7% increase from MarketWatch-polled economists. Housing starts bounced back in July, up 5.9% to a seasonally adjusted annual rate of 896,000, though that was below the forecast for 915,000.
On Nymex, petroleum products were little changed.
September gasoline RBU3 +0.07% was up less than half a cent at $2.99 a gallon, and September heating oil HOU3 +0.30% added a penny to $3.08 a gallon. Prices for both were up near 3% from a week ago.
September natural gas NGU13 -1.23% was off nearly 5 cents, or 1.4%, at $3.37 per million British thermal units, ready for a gain of more than 4% for the week. Prices leapt 2.3% Thursday on the back of a smaller-than-expected increase in weekly U.S. natural-gas inventories.
Prices Friday were most likely seeing some short covering ahead of the weekend, with the possibility of tropical activity in the Atlantic soon as a cloud mass around the Yucatan peninsula may cause some problems over the weekend to early next week, said Beth Sewell, managing partner at Quantum Power & Gas Services.
There wasn’t anything to be concerned about when it comes to weather system Erin, which has weakened into a tropical depression from a tropical storm, she said. “Even if it hits the Gulf [of Mexico], we only receive about 6% of [natural] gas from offshore.”
Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @MWBarbaraKollmeyer. Michael Kitchen in Los Angeles contributed to this report.
