Futures Movers: Oil ticks higher after worst day in a month, heads for weekly gain

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Oil futures crawled higher Friday, headed for weekly gains, a day after fresh signs of rising OPEC production knocked energy markets sharply lower.

October futures on West Texas Intermediate crude CLV8, +0.41% the U.S. benchmark, rose 0.5%, or 34 cents, to $68.92 a barrel. The contract remains below the $70.37 mark hit earlier this week, the highest settlement since July 20, according to Dow Jones Market Data. But with that midweek achievement, the contract is on track to log a 1.7% weekly gain.

November Brent LCOX8, +0.14% was up 0.2%, or 14 cents, to $78.32 a barrel on ICE Futures Europe. It hit the highest point since May earlier this week, accounting for a roughly 1.7% weekly gain.

Friday’s slight gains marked a turnaround from a sharp fall for oil futures Thursday, the worst day in roughly a month as an industry report showed global supplies at a record. U.S. benchmark prices dropped back Thursday from the nearly two-month high seen just a day earlier.

In a closely followed monthly report, the International Energy Agency said daily crude-oil output in the Organization of the Petroleum Exporting Countries climbed in August by 420,000 barrels a day, to average 32.63 million a day. The data backed the monthly report from OPEC released Wednesday, which also showed that members of the oil cartel boosted total output last month.

That output more than made up for an expected decline in Iranian supply due to extant and pending U.S. economic sanctions.

The August report also signaled that global supplies hit a record of 100 million barrels a day.

“We think that the worst fears over supply will not be realized and that slower growth in global demand will prompt a significant fall in the oil price in 2019,” said Caroline Bain, chief commodities economist with Capital Economics. “However, logistical constraints on U.S. output growth and persistent concerns about the impact of U.S. sanctions on Iran’s exports mean that we have revised up slightly our price forecasts.”

She pegged the price of Brent to decline to $70 per barrel by end-2018 and $60 at end-2019, up from previous forecasts of $65 and $55 respectively.

Broadly, the analysts see an economic slowdown for big oil consumers China and the U.S., a pickup in U.S. production once bottlenecks are solved and a rise in OPEC production now that the group has agreed to stop underproducing its collective quota.

The market was looking ahead to weekly data from Baker Hughes on the number of rigs drilling for oil in the U.S., a key metric of activity in the sector due later Friday.

Meanwhile, market participants have also been watching Hurricane Florence, which is rated a Category 1 as it hit the Carolinas early Friday. Even with the downgrade, Florence is expected to remain an “extremely dangerous major hurricane” causing “catastrophic” freshwater flooding.

As it hits the Carolinas and Virginia, the storm has the potential to cause disruptions to the flow of fuel through the key Colonial Pipeline, which moves gasoline and diesel from Houston through states in the Southeast, including the Carolinas, to Linden, N.J.

Fuel-price tracker GasBuddy reported some shortages of gasoline at stations in four states.

Read: Hurricane Florence sparks some fuel shortages, but gas prices won’t see a big spike

On Nymex, October gasoline RBV8, -0.34% fell 0.3% to $1.987 a gallon, while October heating oil HOV8, -0.13% was little changed near $2.2236 a gallon.

October natural gas NGV18, -0.50% lost 0.3% to $2.809 per million British thermal units, holding on to earlier modest gains.

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