New York — Crude futures settled at multiyear highs Friday on the back of a robust demand outlook.
NYMEX November WTI settled $1.13 higher at $73.25/b and ICE November Brent was up $1.00 at $82.72/b. Brent crude closed at its highest level since November 2014.
A decline in US oil rig counts this week added to bullish sentiment. US oil rig counts eased by three this week to 863, and counts in the Permian Basin were down two at 486. The decline, due in part to takeaway issues and budget constraints, comes despite strong incentives to produce more oil.
Despite Energy Information Administration data showing US production at all-time high of 11.1 million b/d last week, NYMEX WTI futures tested four-year highs this week. Likewise export activiy surged to a nine-week high last week, EIA said, with 2.64 million b/d of US crude loading last week for international markets.
A steady stream of bullish economic indicators this week has also added upward momentum to prices. The monthly US consumer confidence index released this week showed levels continued to move higher in Setpember and are hovering near all-time highs. On Thursday, US Bureau of Economic Analysis data showed that second quarter US GDP growth reached 4.2%, up sharply from 2.2% during the first quarter and at the highest level since third quarter 2014. Then on Friday, BEA announced that personal income growth was steady at 0.3% in August.
Taken together the data shows a strong US economy and is indicative of robust demand going forward, all with a backdrop of tightening supply into November due to sanctions on Iran.
The higher close marked a breakout from recent ranges for both contracts. Brent had moved sharply higher during Monday trading, but then hovered at around $81.50 for most of the week. Likewise WTI had traded at around $72/b for most of the week.
Technical analysis of crude futures show that prices have retreated from overbought territory in recent days. A Bollinger band analysis showed Brent and WTI futures were trading at or just above the upper band limit, according to data provider MarketView. Brent settled Friday at 1 cent above the upper band and WTI finished the week 3 cents into overbought territory. The normalization of prices could be indicative of a longer-term move higher for the oil complex following Friday's price rally.
Product futures settled higher on Friday, but pulled back from intra-day highs.
NYMEX October ULSD finished up 2.87 cents at $2.3518/gal and NYMEX October RBOB settled 1.88 cents higher at $2.1012/gal. Earlier in the session ULSD had traded as high as $2.3240/gal and RBOB touched $2.1180/gal.
