Last Minute Bullishness Lifts Oil Prices, But Another Weekly Loss Is Incurred

by Ship & Bunker News Team
Friday April 28, 2023

Demonstrating once again the chronic inconsistency of the crude trading market, investors on Friday did a sudden about-face and demonstrated bullishness over reports of declining U.S. stockpiles and energy firms reporting solid earningst – and boosted oil prices by over 2 percent.

This was in stark contrast to their behaviour in earlier sessions this week, inspired by fears of further interest rate hikes potentially curtailing fuel demand growth.

Still, oil's last-minute rally on Friday wasn't enough to prevent two key benchmarks from posting declines for a second week in a row (with Brent posting a fourth straight monthly decline).

Brent for June delivery rose $1.17, or 1.5 percent, to settle at $79.54 per barrel, while the more actively traded July contract increased 2.7 percent to settle at $80.33.

West Texas Intermediate climbed $2.02, or 2.7 percent, to settle at $76.78 per barrel.

Phil Flynn, senior market analyst at Price Futures Group Inc., summarized the situation by noting that "The market was down much of the week on worries about a looming economic recession and an expansion of the banking crisis with First Republic.

"But, today there were headlines showing there may be a solution to the First Republic problem, and there was data pointing to a rise in oil demand and a decline in output."

Flynn was referring to the U.S. Federal Deposit Insurance Corp, the Treasury Department, and the Federal Reserve starting to orchestrate meetings with financial companies about a solution for First Republic, according to sources. 

First Republic helped trigger what media referred to as the U.S. banking "crisis" in March after wealthy clients began withdrawing deposits en masse.

Flynn was also referring to the Energy Information Administration reporting that fuel demand rose to nearly 20 million barrels per day in February, its highest since November; the EIA added that oil and gasoline inventories fell more than expected last week ahead of the peak summer driving season.

Even though the trading week was replete with bullish reports, it took another report on Friday for traders to finally respond positively: that Exxon Mobil Corp and Chevron Corp enjoyed strong demand and maintained cost-cuts that were implemented during the pandemic lockdowns.

The former company made a record first-quarter profit, essentially doubling profits from the same quarter last year.