Futures Movers: U.S. oil futures score the longest weekly winning streak on record

That marked a ninth weekly climb in a row for the U.S. crude benchmark, the longest-ever weekly winning streak for front-month WTI contracts, based on records going back to April 1983, according to Dow Jones Market Data.

December Brent crude
BRN00,
+0.16%

BRNZ21,
+0.16%,
the global benchmark, rose 92 cents, or 1.1%, at $85.53 a barrel on ICE Futures Europe, for a 0.9% weekly advance.

WTI earlier this week closed at a seven-year high, while Brent has traded at its highest in three years.

“Oil continued its three-month rally of almost 30% as COVID peaked and the U.S. opened up travel to vaccinated travelers,” Jay Hatfield, chief executive officer at Infrastructure Capital Advisors told MarketWatch. “We expect oil to continue its rally as we head into November and colder weather triggers more demand for heating oil, and the holidays drive incremental gasoline demand.” 

Read: Why consumers will be paying a lot more for natural gas this winter

Infrastructure Capital Advisors expect oil to trade in the $80-$100 range in 2022, citing “incremental demand related to international travel and incremental demand from fuel switching, as global natural-gas prices trade at the energy equivalent rate of $180 barrel,” he said.

Crude pulled back Thursday as natural-gas prices retreated following weekly U.S. data that showed a larger-than-expected climb in domestic storage of the fuel. News that China would make moves to roll back record coal prices also put some pressure on oil in early Wednesday dealings, before data showing a surprise fall in U.S. crude stockpiles lifted prices for that session.

Global oil inventory levels “remain tight as demand growth remains firm but production growth lags,” said Marshall Steeves, energy markets analyst at IHS Markit, told MarketWatch. The Organization of the Petroleum Exporting countries and their allies are “sticking with planned monthly increases of 400,000 [barrels per day] while U.S. production actually fell last week and has only been recovering from the pandemic at a slow pace.”

Data from Baker Hughes
BKR,
+1.42%
on Friday also suggested a potential decline in oil production, with the number of active U.S. rigs drilling for oil posting their first weekly decline in seven weeks, down two at 443 this week.

Phil Flynn, senior market analyst at The Price Futures Group, pointed out on Friday the wide price spread between the current front-month WTI December contract. and the December 2022 WTI contract
CLZ22,
+0.07%
indicates a supply shortage.

“You’re seeing the spread get to levels where it has not been for years — the price of December crude of this year is going higher, while the back month is lagging,” said Flynn.

That tells us that supplies in the all-important Cushing, Okla. delivery point for the WTI futures contract are “basically empty” because people are buying as much crude in the front end of the curse as they can get their hands on,” he says.

The recent leg higher for crude to multiyear price highs has come in sympathy with a surge in natural gas. Rising natural-gas prices have prompted increased demand for crude, particularly in China and other Asian countries, as utilities switch gas- and coal-powered generators to oil.

Also see: ‘Weather extremes appear to be increasing’: Drought conditions send oats, wheat and other commodities soaring

Energy commodities “can’t go up every day and we can expect this sector to remain volatile. But the bottom line is that supply remains limited and demand is robust, and if we get an early and cold start to winter, we should be prepared for much higher energy commodity prices,” said analysts at Sevens Report Research in Friday’s newsletter.

November natural-gas futures
NGX21,
+3.36%
climbed 3.2% at $5.28 per million British thermal units, but logged a 2.4% weekly decline.

Rounding out action on Nymex, November gasoline
RBX21,
+0.33%
inched up by less than 0.1% to $2.482 a gallon, ending around 0.2% lower for the week. November heating oil
HOX21,
-0.21%
shed 0.4% to $2.539 a gallon, down nearly 1.4% for the week.