Oil futures: Crude selloff to erodes slim weekly gains
Quantum Commodity Intelligence – Crude oil futures in Friday were were lower as markets surrendered earlier gains amid a late selloff, although benchmarks just about ended the week in positive territory.
Front-month Jul24 ICE Brent futures were trading at $83.07/b (1825 GMT), compared to the day's high of $84.53/b and Thursday's settle of $83.88/b.
At the same time Jun24 NYMEX WTI was trading at $78.51/b versus Thursday's settle of $79.26/b.
Last Friday, Jul24 Brent futures closed at $82.96/b, while Jun24 WTI settled at $78.11/b while both benchmarks had tested near two-month lows earlier this week.
But prices steadied at the back end of the week after EIA data revealed an unexpected draw on US stocks, while increased speculation that OPEC+ will roll over cuts for another quarter helped improve sentiment.
Goldman Sachs said that it no longer expects OPEC+ to announce a partial unwind of voluntary production cuts in June on the back of higher global inventories, although rising spare capacity remains a headwind.
The US investment bank said in a note Thursday it sees global commercial oil inventories up 1.1 million bpd over the last 90 days, driven by builds in China and weak diesel demand.
OPEC+ members are due to meet in Vienna on 1 June, deciding whether to extend its 2.2 million bpd voluntary production cut beyond the second quarter.
Risk
Prices had come under pressure earlier in the week as investors increasingly discounted the so-called risk premium resulting from turmoil in the Middle East.
As it stands, there is little immediate threat to oil supplies, although Yemen's Houthi militants have threatened to expand the range for attacks on commercial shipping, including the Mediterranean.
"The downside looks to be limited as investors have now mostly priced out the risk of a wider conflict in the Middle East. If anything, there remains the risk of renewed escalation in the conflict with Israel wanting to invade Rafah," commented City Index analyst Fawad Razaqzada.
Oil prices also steadied after government data showed China's exports rose by 1.5% y-o-y in April, declining 7.5% in March. However, trade was largely driven by emerging markets with exports to the US down 2.8% on the year, while Europe dropped by 3.5%.
Meanwhile, Atlantic Basis physical crude remains sluggish with WTI Midland heard trading at +$0.55/b to the underlying Dated Brent swap on a CIF Rotterdam basis, which is the equivalent of around -$0.50/b on a FOB basis.
