Oil Retreats After Longest Run of Weekly Gains in Three Years

LAGOS (Capital Markets in Africa) – York after its longest run of weekly gains in three years, as traders and investors awaited more clarity on the strength of the global economy and demand.

West Texas Intermediate futures slid about 1 percent after adding 1.3 percent last week in a sixth straight weekly increase. Global finance ministers and central bankers issued a statement over the weekend that they’re willing to “act promptly” to shore up global growth, which the International Monetary Fund expects will be the weakest in a decade this year. China will release data on gross domestic production for the first quarter on April 17.

Crude has rallied around 40 percent this year as the Organization of Petroleum Exporting Countries and its allies curtail production, while unplanned supply losses from Iran, Venezuela and Libya further tighten the market. Yet the demand outlook remains shaky, with the IMF cutting its global growth forecast and the International Energy Agency warning it could reduce its projections for consumption.

“In recent weeks, the oil market has focused on mounting supply risks from Venezuela, Libya and Iran, together with incoming data from OPEC+ showing that output cuts are progressing more or less as scheduled,” said Jens Naervig Pedersen, senior analyst at Danske Bank A/S in Copenhagen. “This week will likely be more about demand, and whether the recent weakness seen in the global economy has started to fade.”

WTI for May delivery fell 60 cents, or 0.9 percent, to $63.29 a barrel on the New York Mercantile Exchange as of 1:42 p.m. London time.

Brent for June settlement declined 60 cents, or 0.8 percent, to $70.95 a barrel on the London-based ICE Futures Europe exchange. The contract increased 1.7 percent last week. The global benchmark crude was at a premium of $7.49 to WTI for the same month.

U.S. working rigs rose by two to 833 last week, Baker Hughes said. While the number of drilling rigs has dropped from its recent peak of 888 in November, U.S. production has continued to reach new highs, with the latest government data showing it’s at a record  12.2 million barrels a day.

Source: Bloomberg Business News