But Shell CEO says in reality the market is "pretty tight": File Image/Pixabay
An 11th hour burst of optimism influenced by suspicion that oil this week was oversold caused traders to boost prices of two key benchmarks on Friday by over 3 percent – but it wasn't enough to prevent a substantial weekly loss.
Brent settled up $2.80, or 3.9 percent higher, at $75.30 per barrel, while West Texas Intermediate settled up $2.78, or 4.1 percent, at $71.34.
But Brent finished the week with a 5.3 percent decline and WTI plunged 7.1 percent, representing a third straight week of losses.
Stephen Brennock, oil market analyst, PVM
The trouble is that oil traders are a fickle bunch
Stephen Brennock, oil market analyst at PVM, remarked, "Rather than underlying fundamentals, the selling frenzy over the past week has been driven by worries about demand linked to recession risks and the strain in the U.S. banking sector.
"The upshot is that there is a big disconnect between oil balances and oil prices."
Brennock also observed, "To be sure, there is good reason to be bullish — the trouble is that oil traders are a fickle bunch."
It was said that traders were somewhat confident that the U.S. Federal Reserve would pause its rate hikes at its next policy meeting in June, and they also reportedly took solace in a U.S. jobs report released Friday showing the unemployment rate had fallen back to a 53-year low of 3.4 percent in April.
Despite inflation, job growth has averaged 290,000 jobs per month over the prior six months, compared with economists forecasting a 180,000 rise.
Kelvin Wong, a senior market analyst at OANDA, noted that traders were also possibly fortified by expectations of potential supply cuts at the next meeting of the Organization of the Petroleum Exporting Countries (OPEC), in June.
As if to support Brennock's contention of the disconnect between oil balance and prices,
Wael Sawan, chief executive officer at Shell, said the market was actually "pretty tight" – and referenced a firming market structure whereby the prompt spread for Brent was 19 cents per barrel in backwardation compared to 37 cents a month ago.