By Myra P. Saefong and William Watts
WTI oil futures marked an overnight dip to $63.57 a barrel, the lowest in over a year
Oil futures finished on a mixed note Thursday, with U.S. prices down a fourth straight session and global benchmark crude posting a modest gain.
The moves for oil came just a day after global benchmark Brent crude settled at the lowest in more than a year as recession worries continued to cloud the outlook for energy demand.
Price action
Market drivers
The oil market had become “deeply oversold” when WTI futures Wednesday evening took out the lows of the year, said Tyler Richey, co-editor at Sevens Report Research. The June contract’s $63.57 intraday low was the lowest since December 2021, according to Dow Jones Market Data.
“The combination of short-covering and speculative dip-buying sent futures back above the key 2023 support band between $66 and $68 a barrel,” Richey told MarketWatch. That support band is now a “critical focus for oil bulls going forward, particularly on a closing basis.”
Providing additional support during the trading session, China’s manufacturing PMI reading missed estimates but vessel-tracking data showed the amount of seaborne crude oil headed for China hit a two-year high last month, he said.
Still, for now, “it appears that recession concerns are the number one driver to watch for oil traders,” Jameel Ahmad, chief analyst at CompareBroker.io, told MarketWatch Thursday.
“The widespread selling that has taken place across recent days has also shown us that if there was a global asset that we can say has been particularly sensitive to recession fears, it is oil,” he said.
Ahmad said the last few days have been “painful to watch on the charts, but optimists can hope that prices aim to consolidate as we head into the final part of the week.”
He also said “central bank officials appear fairly confident that the economic downturn will not be as drastic as initially feared, which might subsequently mean that too much sensitivity has been priced into oil over recent weeks.”
WTI oil prices settled Wednesday at a more than six-week low and Brent finished at their lowest in over 16 months.
Crude has suffered a rout that’s taken the U.S. benchmark down by more than 11% so far this week and Brent by over 10%, after more than erasing early April gains scored after the Organization of the Petroleum Exporting Countries and its allies — known as OPEC+ — announced surprise production cuts that kicked in at the start of May.
Doubts about Russia’s commitment to a 500,000 barrel-a-day production cut that it pledged to continue through year-end have also undercut crude prices, analysts said.
However, Russia’s deputy prime minister, Alexander Novak, on Thursday said the country was abiding by the cut, news reports said. That added some further support to the energy complex Thursday, said Sevens Report’s Richey.
Also on Nymex Thursday, natural-gas futures extended their decline after the Energy Information Administration reported that domestic natural-gas supplies rose by 54 billion cubic feet for the week ended April 28. That nearly matched the average increase of 52 billion cubic feet forecast by analysts surveyed by S&P Global Commodity Insights.
Read:Natural gas ‘hysteria’ cools, just as demand is expected to heat up
Also see:New York is first state to ban natural gas appliances in new construction
-Myra P. Saefong
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
05-04-23 1543ET
Copyright (c) 2023 Dow Jones & Company, Inc.
Read More: U.S. oil futures post a fourth fourth straight session loss as demand