NEW YORK: Oil prices fell on Friday as investors cashed out weekly profits with U.S. crude set for its biggest weekly gain in seven years after an earlier rally driven by disruptions to crude supplies and Wall Street’s gains from U.S. economic data.
Prices turned negative soon after the release of weekly U.S. oil rig data by industry firm Baker Hughes that showed a 10th weekly drop in the rig count, which was positive to oil but traders and investors chose to lock in profits.
“I think a good part of the selling was due to cashing out of winning positions people had established earlier in the week,” said David Thompson, executive vice-president at Powerhouse, a commodities-focused broker in Washington.
Brent crude was down 22 cents at $35.07 a barrel by 2:13 p.m. EST (1913 GMT). It hit a high of $37 earlier, a peak since Jan. 5.
U.S. crude traded down 29 cents $32.78 a barrel, after gaining almost $1.70 earlier.
For the week, Brent was up more than 6 percent after rising for four days. U.S. crude rose 11 percent on the week, its steepest weekly rise in seven years, after rallying without stop for five days.
Prices were up from early on Friday on news that pipeline outages in Iraq and Nigeria had removed more than 800,000 barrels of crude per day from the global market for at least the next two weeks. The disruptions should offset recent increases to supply from Iran, analysts said.
As the session progressed, a run-up in U.S. stock prices added fuel to oil as Wall Street’s key S&P index hit near 2-month highs after an upward revision to the country’s fourth-quarter economic growth. A raft of other U.S. economic data also boosted equity prices, which have moved in tandem with oil for weeks.
Some analysts and traders expect crude prices continue to rise in the near-term, or at least remain volatile.
Hans Van Cleef, senior energy economist in Amsterdam for ABN Amro, said Brent’s break above the $36.25 technical resistance indicated “more short covering in the coming days”.
Jeffrey Grossman, dealer at New York’s BRG Brokerage, said he expected U.S. crude to trade at over $40 by end of March.
Investment bank Jefferies called current oil prices unsustainable, saying output declines among key non-OPEC producers will likely spark price recovery by second half 2016.
Copyright Reuters, 2016
Courtesy : BRecorder