Oil futures finished sharply lower on Friday, with U.S. and global benchmark prices down roughly 3% for the week as traders focused on a backdrop of weak U.S. economic data and record domestic production.
Data showing a drop in OPEC output to its lowest in four years failed to support prices. Members of the Organization of the Petroleum Exporting Countries pumped 30.68 million barrels a day in February, down 300,000 barrels a day from a month earlier and the lowest since 2015, according to a survey from Reuters released Friday.
“The market has priced in OPEC to extend their production cuts until year end and markets may need a new catalyst to take crude higher,” said Edward Moya, senior market analyst at Oanda.
On Friday, April West Texas Intermediate crude CLJ9, -2.48% fell $1.42, or 2.5%, to settle at $55.80 a barrel on the New York Mercantile Exchange. The contract lost about 2.6% for the week. Based on the front-month contracts, prices climbed 6.4% for the month of February, according to Dow Jones Market Data.
Global benchmark May Brent LCOK9, -2.07% settled at $65.07, down $1.24, or 1.9%, on ICE Futures Europe. Prices based on the front-month contract saw a weekly loss of 3.2% after rising 6.7% for February.
The decline in oil prices likely caught “traders off guard,” said Scott Gecas, chief market strategist at Walsh Trading, particularly given the news on OPEC output. Still, “one could make the case for a lower price based on the ISM headline.”
Weaker-than-expected data on U.S. manufacturing and consumer sentiment, on the heels of a fall in Chinese factory activity to its lowest in three years, raised worries about energy demand.
Data Friday showed American manufacturing grew their businesses in February at the slowest pace since the election of President Donald Trump in November 2016, with the ISM manufacturing survey falling to 54.2 in February from 56.6. Meanwhile, the final reading of the University of Michigan consumer sentiment index faded in February, with a 93.8 reading, below the MarketWatch-compiled economist consensus of 95.6. Meanwhile,
Oil prices took to split paths on Thursday, with U.S. prices extending gains from a weekly drop in domestic crude supplies and front-month global benchmark prices lower on the weaker Chinese economic data, which fed concerns over a demand slowdown. Both benchmarks, however, finished February higher, up a second consecutive month.
Consulting firm JBC Energy said Thursday that crude output from the Organization of the Petroleum Exporting Countries declined by 550,000 barrels a day in February, bringing the oil cartel’s total drop in output since October to 2.2 million barrels a day. That figure is much higher than the 800,000 barrels a day OPEC agreed to cut from October levels.
OPEC, led on a de facto basis by Saudi Arabia, and 10 producers outside the cartel, led by Russia, agreed in December to collectively hold back output by 1.2 million barrels a day for the first half of this year.
What’s more, the U.S. Energy Information Administration reported Wednesday that U.S. crude supplies unexpectedly dropped by 8.6 million barrels. The decline followed five straight weeks of increases. Weekly data more broadly have shown that U.S. crude output has surged above a record 12 million barrels a day. The government expects crude output to average 12.4 million barrels a day this year.
Still, Baker Hughes BHGE, +2.84% on Friday reported that the number of active U.S. rigs drilling for oil fell by 10 to 843 this week. That marked a second straight week of declines and implied a potential output slowdown.
Read: What oil-tanker rates can tell readers about OPEC members’ compliance with cuts
Among the oil products, April gasoline RBJ9, -1.42% shed 1.3% to $1.730 a gallon and April heating oil HOJ9, -1.33% settled down 1.3% at $2.001 a gallon. Front-month contract prices for both products fell for the week.
April natural gas NGJ19, +1.21% rose 1.8% to $2.859 per million British thermal units after ending February only slightly lower. It has not climbed for seven consecutive sessions, though prices had plunged by 39% over the last three months, marking the largest three-month percentage decline since Sept. 2008, according to Dow Jones Market Data.
The EIA reported Thursday that domestic supplies of natural gas fell by 166 billion cubic feet for the week ended Feb. 22. That was a bit less than the 171 billion cubic foot decline forecast by analysts polled by S&P Global Platts.
Christopher Alessi contributed to this article
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