U.S. West Texas Intermediate crude oil futures are inching higher on Friday, but a steep sell-off earlier in the week has solidified a weekly lower close.
In case you haven’t noticed, there was a dramatic shift in sentiment in the market this week. This was caused by the departure of a couple of events that had been supporting the market over the short-term like the hurricane in the Gulf of Mexico that shut down production last week and the elevated tensions in the Middle East that had been underpinning prices for several weeks.
Buyers put in a premium for Hurricane Barry, but other than halting production for a couple of days, the storm did little to disrupt supply. Buyers also drove prices higher after an Iranian navy vessel taunted a British tanker. Once again, since there was no supply disruption, speculative buyers were forced to liquidate.
The bearish surprise for bullish investors earlier in the week was the announcement that Iran was willing to talk with the U.S. about its nuclear missile program. The second surprise for the bulls was the jump in crude oil products inventories on Wednesday, according to a government report. Sellers also gained controlled on reports of increasing U.S. shale production.
At the end of the week, all we can determine is prices are being propped up by the OPEC-led supply cuts. And if you believe the demand figures from OPEC and the International Energy Agency, these cuts are likely to be offset by the rising…