Energy & precious metals - weekly review and outlook
Pop the bubbly: Oil has rallied for nearly two months now and the run-up isn’t showing any signs of exhaustion, some say. But is that really the case? Let’s examine.
Helped by forecasts for record world oil demand this month — coming no less from the closely-followed International Energy Agency — crude prices finished up for a seventh straight week of gains. That’s the longest winning streak for oil bulls since June 2022.
“Energy traders remain overly confident the oil market will remain tight,” Ed Moya, analyst at online trading platform OANDA, said during Friday’s trade. “It doesn’t seem like exhaustion is settling in yet”.
Moya is, of course, right about how cheery the long oil crowd is on the prospects of crude, with the U.S. West Texas Intermediate, or WTI, hitting a 9-month high of $84.89 per barrel on Thursday. In just under two months, the U.S. oil benchmark has gained up about 20% in all.
But I’d argue with Moya about the endurance of the rally, especially the notion that it isn’t slowing. That’s because WTI rose less than 0.5% in the just-ended week. It was the smallest weekly advance for the U.S. crude benchmark since the run-up which began in the week to June 16. It compares with the near 5% rise from two weeks ago and the 5% also achieved in the second week of this rally.
And it’s not just WTI. London-based Brent crude also rose meagerly for the week. It settled at a little under $87 per barrel, up 0.5% on the day and 0.7% higher on the week.
Like WTI, the weekly gain for Brent was the smallest since the oil rally which began seven weeks ago. But in a similar trend to its U.S. counterpart, the global crude benchmark touched a new milestone on Thursday, reaching a seven-month high of $88.10. In under two
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