West Texas Intermediate (WTI) crude oil for May delivery gained 84 cents Friday, settling at $60.14 per barrel. The WTI, which traded within a range from $59.41 to $60.73, is up 1.9 percent against the March 22 settlement.  June Brent crude oil futures added 48 cents to end the day at $67.58 per barrel. For the week, the Brent is up less than one percent.

“Oil hit a four-month high today during a very strong week for crude which saw global supply tightening concerns outweigh any negative economic news or a plea by President Trump for OPEC to increase production,” said Tom Seng, Assistant Professor of Energy Business with the University of Tulsa’s Collins College of Business. “Both benchmarks are up about 25 percent this year so far.”

Seng noted that oil prices declined Monday after the release of weak global economic data, the apparent lack of progress in U.S.-China trade talks and the inversion of a key yield curve for U.S. government bonds. However, he added that prices rallied through the remainder of the week with the OPEC+ group still committed to output quotas and lingering global crude oil supply concerns.

“Iran and Venezuelan production remain sanction-curtailed,” continued Seng. “And, with WTI approaching the key resistance level of $60 per barrel yesterday, President Trump appealed to OPEC in a tweet to increase its output. That fell on deaf ears as Saudi Arabia needs the higher prices for its national budget.”

Seng also pointed out that the latest Energy Information Administration (EIA) Weekly Petroleum Status Report showed an unexpected, 2.8 million-barrel build in U.S. commercial crude inventories – higher than the American Petroleum Institute’s 1.9 million-barrel projection.

“While on its face, this would seem bearish for prices, distillates inventories declined, adding to the bullish sentiment for the week,” Seng said, adding that other EIA report highlights include:

  • Total oil inventories at just two percent higher than the five-year average for this time of year
  • A decline in refinery utilization to 86.6 percent
  • Crude imports 12 percent lower than year-ago levels (part of which stems from the loss of Venezuelan heavy crude imports)
  • A 540,000-barrel increase in oil stocks at the Cushing, Okla., storage hub
  • Steady week-on-week oil production of 12.1 million barrels per day

“Baker Hughes reported that the number of rigs drilling for oil fell by eight last week, the sixth straight week of declines,” said Seng. “On the economic news front, the stock market looks to end higher on the week despite some ups and downs while a stronger U.S. dollar could not dampen oil’s rally.”