Oil Posts Longest Stretch Of Weekly Gains In Almost Seven Years

Analysts (and politicians) say high prices will continue into the new year: File Image/Pixabay

Another day, another session of demand concerns being trumped by overwhelming evidence of ongoing energy supply declines, the result being oil prices on Friday poised to post the longest stretch of weekly gains since 2015.

After U.S. president Joe Biden said Americans should expect continued high gasoline prices into next year because supply is being withheld by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, West Texas Intermediate rose $1.26 to settle at $83.76 per barrel, with prices up 1.7 percent for the week (for a ninth straight week).

Brent gained 92 cents to settle at $85.53 per barrel, up 1 percent (its seventh weekly gain).

John Kilduff, founding partner at Again Capital, remarked, "There's no real sense in the market that OPEC+ is going to be coming forward with any meaningful amount of additional crude oil in the near future."

Indeed OPEC's de facto leader, Saudi Arabia, earlier this week said that any extra oil from OPEC+ would do little to halt the surging cost of gas, and yet demand recovery as the pandemic abates is far greater than analysts anticipated: U.S. gasoline demand rose to the highest level for this time of year since 2007 this week. 

And the recovery isn't slowing anytime soon: David Martin, head of commodity-desk strategy at BNP Paribas, noted, "We're going to draw stocks this quarter and next."

Ironically, data from Baker Hughes on Friday suggests U.S. producers aren't responding wholeheartedly to the price rally: the number of oil rigs deployed in the country fell by 2 from a week earlier to 443, ending a run of six successive weekly gains.

Also, cautious observers such as Phil Flynn, senior market analyst at Price Futures Group Inc., felt compelled to mention "the possibility" of increased Covid rates in Russia, China, and Germany, augmented by German chancellor Angela Merkel saying the pandemic is not yet over and Federal Reserve chairman Jerome Powell stating he could not rule out another COVID-19 spike this winter.