Oil futures settled at their lowest level in three weeks on Friday, contributing to their largest weekly decline since October.
News reports citing Qatari officials and indicating that an Israel-Hamas ceasefire and hostage deal were imminent had sparked a selloff in oil Thursday, but Qatar subsequently made it clear that a deal had not yet been reached, Reuters reported.
Price moves
-
West Texas Intermediate crude for March delivery
CL00,
-1.92% CL.1,
-1.92% CLH24,
-1.92%
fell $1.54, or 2.1%, to settle at $72.28 a barrel on the New York Mercantile Exchange, with the contract ending nearly 7.4% lower for the week, according to Dow Jones Market Data. -
April Brent crude
BRN00,
+0.44% BRNJ24,
+0.44% ,
the global benchmark, lost $1.37, or 1.7%, ending at $77.33 a barrel on ICE Futures Europe, 6.8% lower for the week. Brent and WTI crude settled at their lowest in about three weeks and registered their largest weekly losses since early October. -
March gasoline
RBH24,
-2.30%
fell 2.2% to $2.15 a gallon for a weekly loss of 7.7%, while March heating oil
HOH24,
-1.50%
declined 2% to $2.66 a gallon for a 5.2% weekly loss. -
Natural gas for March delivery
NGH24,
+2.05%
settled at $2.08 per million British thermal units, up 1.4% on Friday but settling 4.4% lower for the week.
Market drivers
WTI and Brent oil futures had settled at their highest levels since November on Tuesday, then “faltered” over the course of the week, said Rob Haworth, senior investment strategy director at U.S. Bank Asset Management.
“Demand concerns are weighing on prices, driving crude oil back to the middle of the winter trading range,” he said, “while U.S. inventories remain low for the season, especially with recent winter weather challenges.”
Markets remain more focused on “global demand patterns,” Haworth said. “Still-soft global manufacturing PMIs and weakening news from China are particular headwinds.”
Read: ‘Fear alone is not enough’ to drive oil prices higher. Here’s why.
During a committee meeting this week, the Organization of the Petroleum Exporting Countries and its allies, including Russia, recommended keeping the group’s production policy unchanged. Analysts expect OPEC+ to decide in March whether to extend output cuts put in place last year for the first quarter.
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Meanwhile, traders await retaliatory strikes by the U.S. after a drone attack by an Iran-backed group last weekend killed three U.S. service members in Jordan.
Read: Oil prices fall despite ‘grave escalation’ of Middle East crisis. Here’s why.
The market “is focused on any update on ceasefire talks as well as potential incremental datapoints from the [White House] on more retaliatory strikes,” analysts at Jefferies said in a note.
Looking ahead, Haworth said that in order for oil to break its recent trading range, there would need to be “some significant uptick in global business activity, especially goods trading from China.”
There’s also the question over whether OPEC members “relent on output cuts, perhaps pressuring prices, though any acceleration for U.S. Strategic Petroleum Reserve purchases on lower prices likely limits losses,” he said.
Earlier this week, the U.S. Energy Department announced the new purchase of 3.1 million barrels of oil for the nation’s SPR for delivery in May. It also plans to buy up to another 3 million barrels of oil for delivery in June amid continued efforts to refill the reserve.
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