Oil gained for a second straight week as OPEC assured traders it’s committed to culling supplies ahead of a key meeting with allies in Azerbaijan this weekend.
Futures advanced 4.4 percent this week in New York and settled Friday just pennies off a four-month high. OPEC self discipline and a surprise reduction in U.S. crude inventories signaled tightening supplies, but concern that the U.S.-China trade dispute won’t end soon limited gains at week’s end.
“The market basically seems to be stalling,” said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut. “Concerns that either the delay in the trade negotiations or signs of worries about slowing economic growth that will impact energy demands are limiting the market’s upward movement.”
Crude has risen 29 percent this year as various geopolitical and economic factors diminished concerns about a worldwide glut. The International Energy Agency reported Friday that OPEC’s February crude production fell to a four-year low. Meanwhile, Saudi Arabia announced it will continue to curb production and American sanctions have isolated two major exporters, Venezuela and Iran.
West Texas Intermediate for April delivery slipped 9 cents to close at $58.52 a barrel on the New York Mercantile Exchange.
Brent for May settlement declined 7 cents to close at $67.16 on the London-based ICE Futures Europe exchange. The contract traded at an $8.34 premium to WTI for the same month.
Meetings scheduled for March 17 and 18 in Baku, Azerbaijan, will be the first ministerial gathering of OPEC and allied producers since Saudi Arabian Energy Minister Khalid Al-Falih stressed the need to continue with the production cuts. Deliberations by important committees will be followed by a full meeting of cartel leaders in Vienna next month.
OPEC’s monthly report on Thursday slashed forecasts for global oil demand and boosted projections for supplies from non-OPEC countries, particularly in the second half of the year. As a result, the group indicated that a surplus may emerge during the fourth quarter even as cutbacks trim the group’s overall production.
As the crisis in Venezuela has deepened, the IEA on Friday issued a pointed reminder that the Saudis and others in OPEC have enough spare crude reserves to make up for a major disruption in the Latin American country.
“We’ve got a major supply event going on in Venezuela,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, Missouri. “We’re rapidly heading to a point where they probably won’t be exporting oil at all.”
Other oil-market news: Gasoline futures gained 0.4 percent to close at $1.8577 a gallon Exxon Mobil Corp. is delaying a C$2.6 billion ($1.9 billion) oil-sands project in Canada by at least a year as the nation’s energy industry grapples with a shortage of pipeline space and government-mandated production cuts.