Oil Futures score First Weekly Gain on more than a Month
Crude-oil futures rallied on Friday as a drop in the U.S. dollar and another decline in U.S. rig counts helped prices score their first weekly gain in five weeks.
Traders also positioned themselves before the expiration of the April futures contracts.
On the New York Mercantile Exchange, April CLJ5, +4.34% which expired at the close Friday, settled at $45.72 a barrel, up $1.76, or 4%. Crude for May CLK5, +2.02% delivery, which became the front month, tacked on $1.04, or 2.3%, to $46.57 a barrel.
Based on the most-active contracts, crude futures saw about a 3.9% gain on the week, according to FactSet. The April contract was up roughly 1.9% from its week-ago settlement.
May Brent crude LCOK5, +1.45% on London’s ICE Futures exchange ended at $55.32 a barrel, up 89 cents, or 1.6%. Prices logged a weekly gain of more than 1%, based on the most-active contracts.
“Ever since the Fed announcement, crude has been caught up specifically with the U.S. dollar move and the wild swings we are seeing there,” said Tariq Zahir, managing member at Tyche Capital Advisors.
The ICE U.S. Dollar Index DXY, -1.28% was trading down 2.2% for the week. Commodities priced in dollars, including oil, often trade inversely with the dollar, as moves in the U.S. unit can influence the attractiveness of those commodities to holders of other currencies.
Data Friday from Baker Hughes BHI, +2.53% showed that the number of U.S. rigs actively drilling for oil and natural gas as of March 20 fell 56 rigs from last week to 1,069. The number of oil rigs fell 41 to 825.
The count really “doesn’t have an impact since production hasn’t come off even with rig counts coming down,” Zahir said, ahead of the latest rig count. “The production cuts on rigs will take months to show up.”
On Friday, the Obama administration revealed new rules on hydraulic fracturing — a drilling technology used to unlock reserves of oil and natural gas.
The rules could slow down drilling and development, said Richard Gechter, Jr., principal and president of Richard W. Gechter Natural Gas Consulting. But the real impact will likely be on federal land, while most of the fracking is done on private land, he said.
On Nymex, April natural gas NGJ15, -1.03% fell 2.7 cents, or 1%, to $2.786 per million British thermal units after earlier tapping a high of $2.919 on the back of gains in oil. Prices were up roughly 2.2% for the week.
Nymex April gasoline RBJ5, +0.82% rose 2.4 cents, or 1.3%, to $1.798 a gallon, up 2% for the week. April heating oil HOJ5, +0.36% ended at $1.734 a gallon, up 1.2 cents, or 0.7%, with prices up 1.2% for the week.
Source: MarketWatch
