Glut-Obsessed Traders Drive Oil Towards Another Weekly Loss

Meanwhile, analysts contemplate the possibility of a U.S. invasion of Venezuela: File Image/Pixabay

Oil on Friday headed towards another weekly loss due to analytical concern of a global glut shifting into overdrive; however, the commodity managed to eke out minuscule daily gains as a meeting between U.S. president Donald Trump and Hungary's prime minister Viktor Orban was viewed favourably.

Brent settled up 25 cents at $63.63 per barrel, and West Texas Intermediate settled up 32 cents at $59.75 per barrel; both benchmarks were on course for a 2 percent weekly decline.

Optimism over the Trump/Orban meeting in the White House stemmed from expectations for a deal that could compensate for new sanctions against Russia that have impacted Lukoil and Rosneft.

However, Friday's trading session was predominated by concern over a shortage of air traffic controllers due to them not being paid because of the U.S. government shutdown - a situation that caused the U.S. Federal Aviation Administration to order a cut of several thousand flights.

Phil Flynn, senior market analyst for Price Futures Group Inc., said, "The fact that we're shutting down flights is taking out a lot of diesel demand."

Dennis Kissler, senior vice president for trading at BOK Financial, warned that,  "If the market flips to contango, we may see more bearish funds enter the crude space.

"Most traders remain surprised that US crude oil production remains as strong as it has given the latest price drop."

Meanwhile, China on Friday reported that imports rose in October from a year ago; however, Bloomberg observed that, "the country's pace of stockpiling is expected to slow, potentially removing a support for prices."

Finally on Friday, the oil market was said to be bracing for turbulence as the U.S. senate voted against a motion that would have required Trump to get congressional approval for a military attack on Venezuela; OilPrice.com stated, "The oil markets are now bracing for a new geopolitical risk premium to kick in soon."