Crude oil futures ended lower on Friday (Nov 9), erasing early gains as U.S. inflation data for May was hotter than expected, sending the dollar higher and stocks tumbling. WTI CrudeIt was still up for the seventh straight week.
energy commodity prices
- Delivered in July WTI CrudeFutures fell 84 cents, or 0.7%, to settle at $120.67 a barrel, up 1.5% for the week.
- Delivered in August Brent CrudeFutures fell $1.06, or 0.9%, to settle at $122.01 a barrel, up 1.9% for the week, their fourth straight weekly gain.
WTI Crudefutures and Brent CrudeFutures both hit their highest close since March 8 on Wednesday.
- Gasoline futures for July delivery fell 2.4% to settle near $4.1722 a gallon, retreating from a record close on Thursday and down 1.9% for the week.
- Delivered in JulyThermal Fuel FuturesPrices fell 0.8% to settle at $4.3667 a gallon, up 2% for the week.
- Natural gas futures for July delivery fell 1.3% to settle at $8.85 per million Btu, following rising 3.8% for the week.
market driving force
along withUS dollar indexUp 1%, crude oil futures fell from a nearly 3-month high. Earlier, the US consumer price index (CPI) rose 8.6% in May, still at a 40-year high, leading to market expectations that the Fed will raise interest rates more aggressively in an effort to control soaring prices.
A stronger dollar might be detrimental to dollar-denominated commodities, which are more expensive for buyers using other currencies.
U.S. stocks fell sharply on the same day,Dowplunged 880 points,S&P 500 It fell 2.9%. A sharp sell-off in stocks might drag other assets down, especially if investors are forced to liquidate positions to meet margin calls.
However, Edward Moy, senior market analyst for the Americas at Oanda, reported that the level of weakness in crude oil was relatively low. “As the economic outlook continues to dim, some traders are going into de-risking mode, but no one really wants to give up the best trade of the year, which is oil and energy stocks.”
The number of U.S. oil rigs rose by six this week to 580, oilfield services firm Baker Hughes said on Friday, up from 461 a year earlier.
Oil prices rose this week as fuel demand continued to be strong. Gasoline inventories fell further, the U.S. Energy Information Administration (EIA) reported earlier this week, signaling a further increase in demand as the summer driving season is in full swing, even as the average U.S. gasoline price is expected to hit $5 a gallon for the first time.
“Gasoline inventories are just above 218 million barrels, a level that is usually seen towards the end of the peak driving season, not at the outset,” Warren Patterson, head of commodity strategy at ING, said in the report.
Investors continued to track developments in China, with some parts of Beijing and Shanghai reopening following an earlier easing of lockdowns, according to news.
While oil complexes have embraced China’s “stop-and-go economy,” said Stephen Innes, managing partner at SPI Capital Management, crude oil might face headwinds from a stronger dollar as the U.S. economy fears stagnant inflation.
Innes said that despite the government’s continued release of the Strategic Petroleum Reserve (SPR) and OPEC+ plans to expand production, it has failed to cool oil. The bulls believe that with the November elections looming, the authorities may become increasingly desperate and may even allow Venezuelan exports to Europe, “which might become a price ceiling.”
“But no matter what the stock market does, the clearest interpretation in the oil market is that tighter crude and oil product market supplies will continue to support oil as we enter the summer driving season.”
