By Barani Krishnan
Investing.com – While all eyes will be on the travel numbers from the Memorial Day weekend, due next week, some bottom-fishers came back to oil on Friday, helping the market steady after Thursday’s bloodbath.
But trading remained volatile, with benchmark contracts moving in a wide range of about $1.50 on the day. The market also posted its biggest weekly loss for the year.
, the benchmark for U.S. crude, settled up 72 cents, or 1.2%, at $58.62 per barrel. It had risen $1.07 at the session high and traded as much 41 cents in the negative.
, the global benchmark for oil, settled up 93 cents to $68.69.
WTI fell 6% on Thursday, crashing below its $60 per barrel support of the past month while Brent slumped 5% to below its $70-per-barrel perch. It was the worst trading day for crude since the beginning of the year and after the start of OPEC production cuts in December, as the escalating U.S.-China trade war and huge crude pileups from weak refiner demand combined to roil the market.
Even with Friday’s rebound, WTI ended the week almost 7% down while and Brent slid about 5%. Year to date, oil is still up substantially, with U.S. crude up 29.1% and its U.K. peer ahead 27.7%.
“While we may see more downside, next week the bulls will start to come back, especially if weekend travel lives up to expectations,” Phil Flynn, analyst at Price Group Futures in Chicago, said. The Memorial Day weekend kicks off the peak summer road travel period in the U.S.
“Stocks at some point will stabilize, despite the China trade war threats, because, despite the fear of a fallout from a trade war, the U.S. economy is strong, and it will adjust,” Flynn added.
One reason for oil’s selloff this week was the weak demand for crude from refiners that would typically be ramping up production of gasoline at this time of year to cater to the increased motoring activity.
Data from the Energy Information Administration on Wednesday showed a surprise of nearly 5 million barrels last week, similar to the prior week, versus expectations for a drawdown of 600,000 barrels.
Aside from the surge in crude inventories, the EIA said total motor also increased by 3.7 million barrels during the week ended May 17, against forecasts for a drop of nearly 816,000.
rose by 800,000 barrels last week versus expectations for a drop of 48,000 barrels.
While the trade war this week trumped the geopolitical tensions that had boosted oil prices initially, some forecasters remained optimistic about crude’s comeback. UBS on Friday said it expected Brent to reach $75 this month for a 2019 high.
“Compliance of OPEC and its allies to the production-cut deal remains high, while production from Iran and Venezuela is likely to again trend lower this month,” the Swiss-bank’s closely-followed oil analyst Giovanni Staunovo said, Reuters reported.
Traders were on the lookout for the weekly oil rig count from industry firm Baker Hughes that came after 1:00 PM ET. The count of oil rigs working in the U.S. fell to 797 in the most recent week, the third straight weekly decline and the lowest count since March 2018. The count is down 9.9% this year. Despite the decline, U.S. crude production is near record highs at 12.2 million barrels per day.
The rig count, usually an indicator of future production, has belied the recent highs in U.S. crude production, often coming in lower when expectations are for it to rise.