By Christian Berthelsen
Oil futures eked out a gain for a second straight session on
Friday, at least temporarily arresting the steep slide that has
dragged U.S. and global crude benchmarks into bear-market territory
over the last four months.
Front-month November futures for light sweet crude ended the day
up 5 cents at $82.75 a barrel on the New York Mercantile Exchange.
Prices were up more than 2% early in the session, but gains faded
as the day wore on. Still, the U.S. benchmark lost more than 3% on
the week as members of the Organization of the Petroleum Exporting
Countries appeared poised to maintain export levels and compete for
market share rather than cut production to shore up prices amid an
abundance of oil.
The global Brent benchmark rose 57 cents, or 0.7%, at $86.16 a
barrel on the ICE Futures Europe exchange. Brent futures are also
in bear-market territory and lost 4.9% this week.
Analysts said a range of factors contributed support to the
market Friday, including positive economic data, dovish central
bank comments and a bullish research note from Goldman Sachs, as
well as indications of a pickup in physical demand now that prices
have dropped so sharply.
"I think we have seen a peak in downside momentum," Citigroup
Inc. analyst Tim Evans said. "We have probably seen a peak in the
fear of demand weakness and the fear that OPEC may just stand back
and let it drop. At this point I think the feel of panic over that
possibility has probably eased."
U.S. consumer sentiment and housing starts data came in better
than expected, and European central bankers made remarks
interpreted as eager to spur economic reforms and jump-start
growth. In addition, there were indications that physical buyers
such as China, the world's second-largest oil consumer behind the
U.S., were increasing purchases, and other bargain-hunting and
book-squaring ahead of the weekend and next week's Nymex
front-month contract expiration shored up the market.
In a research note issued early Friday, Goldman Sachs said
crude's selloff has been driven by investor positioning based on
expectations rather than a real-world imbalance between supply and
demand, and that if prices got low enough they could spur renewed
demand and consumption. "Prices have likely overshot to the
downside," the bank said.
Still, some analysts questioned how long the stasis might last,
pointing to indications that certain OPEC members may continue high
levels of exports rather than scale back to support prices in a
continuing battle for market share. Even Goldman Sachs noted it
remains bearish in the longer term on the market, as U.S. oil
production continues to flood markets.
In product markets, November gasoline futures gained 2.18 cents,
or 1%, to settle at $2.2327 a gallon. November diesel futures rose
2.73 cents, or 1.1%, to $3.4976 a gallon.
Write to Christian Berthelsen at
christian.berthelsen@wsj.com
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