Crude Incurs Weekly Losses on Building Concern of Oversupply

But a media outlet marvels at the commodity's remarkable resilience in 2019 overall: File Image/PixaBay

Crude prices ended the week on Friday largely as predicted, with gains from strong U.S. economic data being offset by yet more reports of crude buildups, the latter supporting the growing analytical consensus that the market is saturated with oil despite the highly publicized Iran sanctions and Venezuela's output woes.

This consensus is so strong that despite a U.S. jobs report showing that the unemployment rate in that country has dropped to a more than 49-year low of 3.6 percent (thus increasing expectations that crude demand will stay strong), the news earlier this week of U.S. exports exceeding 3 million barrels per day (bpd) in November for the first time and peaking at 3.6 million bpd earlier this year was enough to cause a weekly loss for crude prices.

Brent settled at $70.85 per barrel, rising 10 cents, but the global benchmark shed 2.6 percent for the week, breaking a five-week winning streak; West Texas Intermediate  settled up 13 cents at $61.94 per barrel, not enough to prevent a 3 percent loss for the week - WTI's second straight weekly decline.

Mohammad Darwazah, a director at Medley Global Advisers, on Friday suggested that although much has been made of late of the Organization of the Petroleum Exporting Countries (OPEC) possibly extending its supply cuts to the end of the year to keep the market in balance, its de facto leader could well do an about face.

He said, "The market looks well supplied right now, but we've yet to see the full impact of what happens with Iranian volumes; Saudi Arabia will likely push more exports to Asia in June."

This would be in response to reports from confidential sources that oil refiners in Asia are asking the Saudis for more crude to compensate for loss of Iranian exports.

Even Bloomberg suggested that despite see-saw prices and analytical concerns switching from one polarity to another, the market is more resilient than given credit for: on Friday it stated, "Crude's indifference to the array of threats reflected that world markets appear comfortably supplied for the time being, largely thanks to the ongoing surge in American production," and it reminded readers that  Brent increased 27 percent in the first quarter of this year, its strongest in a decade.