• Thursday, June 13, 2024
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Oil heads for longest weekly losing streak since 1986

Oil advanced in New York, paring an eighth weekly decline, as the International Energy Agency lowered forecasts for supplies from outside OPEC and said prices could recover.

West Texas Intermediate futures climbed as much as 3.6 percent. The grade headed for a loss of 1.8 percent last week, capping the longest run of weekly declines since March 1986. Non-OPEC oil producers will increase output this year at a slower rate than previously forecast, aiding a recovery in crude prices, the IEA said in its monthly market report.

“The market is very over-sold and has been looking for signs for a pick-up,” Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd., said. “The IEA has very clearly come out and said there will be an impact from price. They’ve lowered Canada, Colombia production-wise; they’ve talked about shale as well.”

West Texas Intermediate for February delivery climbed as much as $1.67 to $47.92 a barrel in electronic trading on the New York Mercantile Exchange, trading for $47.50 at 12:18 p.m. London time. The contract slid $2.23 to $46.25 on Jan. 15. The volume of all futures traded was about 61 percent above the 100-day average for the time of day.

Read also: IEA says oil may have bottomed as non-OPEC producers cut output

Brent for March settlement was $1.45, or 3 percent higher, at $49.72 a barrel on the London-based ICE Futures Europe exchange. The February contract expired yesterday after decreasing $1.02 to $47.67. The European benchmark crude traded at a premium of $1.82 to WTI for the same month.

Oil fell almost 50 percent last year, the most since the 2008 financial crisis, as supplies swelled amid the fastest pace of U.S. production in more than three decades and the Organization of Petroleum Exporting Countries resisted calls to cut output. Goldman Sachs Group Inc. and Societe Generale SA were among banks to reduce their price forecasts.

The IEA, a Paris-based adviser to consuming nations, lowered its non-OPEC supply growth estimate by 350,000 barrels a day, the first cut since the 2015 forecast was introduced in July. Half the reduction is from Colombian output while effects on U.S. production are so far “marginal,” it said.

The slow-down in output growth will lead to a “rebalancing” of currently over-supplied global markets in the second half, reviving prices, the agency said.

“This might help to soothe the market following another turbulent week,” Ole Sloth Hansen, an analyst at Saxo Bank A/S said from Copenhagen. “While this is all potential good news and could support a price recovery later this year, the current fundamentals do not really support higher prices.”

WTI may extend losses this week, according to 21 of 40 analysts and traders in a Bloomberg News survey. Eleven said futures will advance.