Oil Posts Biggest Weekly Gain Since July on U.S. Fed Reassurance

Futures in New York rose 0.4% Friday, erasing earlier losses

Sheela Tobben

08 Sep 2019, 07:04 PM IST

Oil Posts Biggest Weekly Gain Since July on U.S. Fed Reassurance

An oil barrel stands in spill at a Petroleos de Venezuela SA (PDVSA) facility in the Orinoco Belt of El Tigre, Venezuela. (Photographer: Bloomberg)

(Bloomberg) -- Oil posted the biggest weekly gain since July as Federal Reserve Chairman Jerome Powell sought to calm fears of a possible recession following a lackluster jobs report that was seen as dimming the demand outlook.

Futures in New York rose 0.4% Friday, erasing earlier losses. Powell said the most likely outlook for the U.S. and world economy is continued moderate growth, but the central bank was monitoring “significant risks.” The market also drew support from a U.S. report that showed the rig count had declined for the third week, implying a slowdown in domestic oil production.

“The oil market and equities market are reacting positively to remarks by Powell that the Fed is not expecting or forecasting a recession,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

The U.S. Labor Department on Friday reported that employers added 130,000 new jobs in August, somewhat undershooting economists’ estimates and adding to fears of a weakening economy. Compounding demand worries, the tit-for-tat tariff war between the world’s top two economies worsened, and China moved to cut its reserve requirement.

The market also unraveled gains that were driven by a bullish U.S. petroleum inventory report Thursday which showed weekly stocks in crude and major fuels had declined nearly 10 million barrels.

See also: EIA Stockpiles Drop on Driving Season’s Last Hurrah: Julian Lee

West Texas Intermediate oil for October delivery gained 22 cents to settle at $56.52 a barrel on the New York Mercantile Exchange. It was up 2.6% for the week. Gasoline’s spread to crude, also known as the gasoline crack, rose as much as 11% for the largest weekly gain since July as gasoline futures strengthened.

Brent for November rose 59 cents to settle at $61.54 a barrel on the ICE Futures Europe Exchange, ending the week up 1.8%. The global benchmark traded at a $5.11 premium to WTI for the same month.

Other oil-market news:
Gasoline futures rose 1.8% to $1.5742 per gallon A Chinese oil contractor halted work on an expansion project in Venezuela because it hasn’t been paid, underscoring the difficulties for the Nicolas Maduro regime even at energy ventures backed by allies. Saudi Aramco increased its official selling price for Arab Light crude for October shipment to buyers in Asia by 60 cents a barrel to a premium of $2.30 more than the Middle East benchmark.

Other oil-market news:

Gasoline futures rose 1.8% to $1.5742 per gallon
A Chinese oil contractor halted work on an expansion project in Venezuela because it hasn’t been paid, underscoring the difficulties for the Nicolas Maduro regime even at energy ventures backed by allies.
Saudi Aramco increased its official selling price for Arab Light crude for October shipment to buyers in Asia by 60 cents a barrel to a premium of $2.30 more than the Middle East benchmark.

--With assistance from Grant Smith.

To contact the reporter on this story: Sheela Tobben in New York at vtobben@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine Traywick, Mike Jeffers