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Crude oil futures gave up early gains and closed sharply lower on Friday as the monthly jobs report raised concerns about the strength of the U.S. economy, while Saudi Aramco’s decision to cut its official selling prices for October implied expectations of a slowdown in the U.S. economy. weak Asian demand.
Oil prices initially rose after disappointing U.S. jobs data bolstered hopes of a Federal Reserve interest rate cut that could spur economic growth, but the report also heightened concerns about oil demand.
For the second session in a row, OPEC+’s decision to delay its planned output increases failed to impress the oil market as the group failed to address broader demand concerns: “There is no room for additional barrels from OPEC+ in 2025,” said DNB Markets senior energy analyst Helge Andre Martinsen.
“Markets appear to be disappointed with the move,” ING analysts said, as reported by Dow Jones. “The problem is that the oil balance is in surplus in 2025, suggesting that prices are likely to remain under pressure if OPEC+ does not take action in the long term.”
“We’re seeing some quantitative selling from hedge funds here as we get closer to the Fed decision,” Dennis Kissler of BOK Financial said, according to Dow Jones, adding that jobs numbers were mixed but a Fed rate cut this month was already priced in.
“We’re concerned about the weakening economy in Asia and now it looks like the U.S. economy is starting to slow down a bit as well,” Kissler said. “It’s not that we’re seeing a much weaker economy in the U.S., but I think the market is anticipating lower demand as we get closer to the end of the year.”
Nymex front-month crude (CL1:COM) for October delivery ended -2.1% on Friday at $67.67 a barrel, its lowest close since June 12, 2023, and November Brent (CO1:COM) due next month ended -2.2% on Friday at $71.06 a barrel, its worst settlement value since December 3, 2021.
For the week as a whole, WTI and Brent fell 8% and 7.6% respectively, their biggest weekly declines in dollar and percentage terms since the week ending October 6, 2023.
October Nymex Gasoline RBOB (XB1:COM) Closed -1.5% on Friday at $1.896 a gallon, its worst settlement since Feb. 26, 2021, and front-month Nymex October heating oil (HO1:COM) was -2.5% on Friday at $2.115 a gallon, the lowest level since Dec. 3, 2021; during the week, the benchmark indices fell by 9.4% and 7.1%, respectively.
However, U.S. natural gas futures snapped a three-week losing streak, with the October Nymex contract due next month (NG1:COM) ending +0.9% on Friday and rose 6.9% on the week to $2.275/MMBtu, boosted by growing liquefied natural gas exports and a lower-than-expected inventory build.
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Bank of America analysts cut their 2025 Brent oil price forecast by $5 to $75 a barrel, citing weaker demand, particularly from China, and a significant inventory build.
According to BofA, moderate growth in global oil demand of 1.1 million barrels per day in 2025, combined with an increase in non-OPEC oil supply of nearly 1.6 million barrels per day, will limit the ability of OPEC+ to increase production.
Even with OPEC plans now on hold, the market should reach a surplus of 730,000 bbl/day in 2025, putting downward pressure on prices, the bank said.
The reduced forecast also prompted BofA to cut its 2025 earnings estimates for major oil and gas companies by 6% on average, “placing greater weight on superior resilience.”
Energy (NYSERCA:XLE), represented by the Energy Select Sector SPDR Fund ETF, ended the four-day week -5.7%.
Top 5 gainers in energy and natural resources over the past 5 days: Sable Offshore (SOC) +32.4%Distribution and Marketing Company (EDN) +14.7%Braskem (BAK) +9.1%MP Materials (MP) +7.8%Southern Gas Transporter (TGS) +7.7%.
Top 20 Energy & Natural Resources Declines Over Past 5 Days: Nano Nuclear Energy (NNE) -34.8%Ramaco Resources (METC) -25.3%Vital Energy (VTLE) -23.3%Eos Energy Companies (EOSE) -21.6%Petroleum Battalion (BATL) -20.7%Obsidian Energy (OBE) -20.1%Piedmont Lithium (PLL) -19.8%Alpha Metallurgical Resources (AMR) -17.7%Indonesian Energy (INDO) -17.4%Kosmos Energy (KOS) -17.3%First Majestic Silver (AG) -17.1%Nabors Industries (NBR) -17%Hallador Energy (HNRG) -17%Vaalco Energy (EGY) -16.9%Bloom Energy (BE) -16.4%Baytex Energy (BTE) -16.3%KLX Energy Services (KLXE) -16.3%Sigma Lithium (SGML) -16.2%Uranium Energy (UEC) -16.1%Albemarle (ALB) -16.1%.
Source: Barchart.com