Pump jacks operate near Loco Hills on April 23, 2020 in Eddy County, New Mexico.
Paul Ratje | Getty Images
Oil prices resumed their ascent on Friday due to the continued tightening in U.S. supply, but were heading for a stable weekend as coal and gas prices eased, limiting the change in fuel that had fueled demand for petroleum products for electricity.
US West Texas Intermediate (WTI) crude futures rose 20 cents, or 0.2%, to $ 82.70 a barrel at 1:48 a.m. GMT, reversing part of Thursday’s 92-cent loss.
Brent crude futures rose 24 cents, or 0.3%, to $ 84.85 a barrel, recouping some of the $ 1.21 drop from the previous session. Brent hit a three-year high of $ 86.10 on Thursday, but was on track to end the week unchanged.
The market hit multi-year highs earlier in the week amid concerns over coal and gas shortages in China, India and Europe, which prompted a switch to diesel and fuel oil for electricity.
“Falling prices for natural gas and coal would have removed some of the support for the oil market,” ING’s commodities strategists said in a note.
U.S. crude was heading for a 0.5% rise for the week, standing near a seven-year high earlier in the week as investors consider low crude inventories at the main storage site of Cushing, Oklahoma.
“There are clear concerns about the inventory drain that we are seeing at WTI’s Cushing delivery center,” ING analysts said.
US Energy Information Administration data on Wednesday showed crude inventories at Cushing fell to 31.2 million barrels, their lowest level since October 2018, despite falling refinery crude flows during the week before October 15th.
Analysts at the Royal Bank of Canada said some steam exited the market as investors turned their attention away from soaring crude prices earlier in the month.
“Some investors are also reducing risk in various energies, the rationale being that the euphoria of the energy crisis has peaked,” RBC analyst Michael Tran said in a note, adding that “it is not necessarily our point of view”.