Crude oil grinds higher with another weekly gain, building bullish momentum (NYSEARCA:USO)

Crude oil added to recent gains Friday to wrap up a fourth winning week out of five, benefitting from a ratcheting up of tensions in Middle East while overcoming some difficult headlines along the way.

During the week, U.S. stockpiles posted a big 12M-barrel build in the largest weekly increase since November, the IEA said global oil demand growth is losing momentum while supplies outside OPEC+ continue to rise, and two hotter than expected U.S. inflation reports lifted the dollar and reduced any chance for an early rate cut from the Federal Reserve.

A larger than expected drop in U.S. retail sales kept rate cut hopes alive, but economists cautioned that results likely were slowed by mid-January extreme cold snap.

Bloomberg’s Grant Smith noted time spreads for both the WTI and Brent benchmarks are signaling tight conditions, which he believes suggests the market can support prices at current levels, barring any major shocks to supply.

Oil prices tend to see a modest rise of 1.4% in Q1, according to a Bloomberg seasonal analysis of Brent crude’s 10-year average; gains in the current quarter are ~5.5% so far.

Bullishness is growing among some prominent oil market watchers: Standard Chartered says Brent prices should be above $90/bbl given how little oil inventories grew last month, J.P. Morgan sees oil climbing another $10 by May, and Morgan Stanley cited surprisingly tight conditions in raising its price forecast.

Front-month Nymex crude (CL1:COM) for March delivery finished +1.5% on Friday to $79.19/bbl, its highest settlement value since November 6, and front-month April Brent crude (CO1:COM) closed +0.7% to $83.47/bbl; for the week, WTI jumped 3% and Brent added 1.5%.

U.S. natural gas (NG1:COM) has declined for four of the past five weeks, ending +1.7% on the day but down 12.9% for the week at $1.609/MMBtu, its second lowest settlement this year.

ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI), (UNG), (BOIL), (KOLD), (UNL),(FCG)

Oil and gas equities, as represented by the Energy Select Sector SPDR (NYSEARCA:XLE), finished +1.5% for the week.

Top 5 gainers in energy and natural resources in the past 5 days: Fusion Fuel Green (HTOO) +105.4%, Verde Clean Fuels (VGAS) +95.4%, Nouveau Monde Graphite (NMG) +43.3%, Meta Materials (MMAT) +38.1%, DNOW (DNOW) +25.1%.

Top 5 decliners in energy and natural resources in the past 5 days: SSR Mining (SSRM) -48.6%, Fluence Energy (FLNC) -14.6%, Bloom Energy (BE) -14.3%, Global Gas (HGAS) -13.2%, Encore Energy (EU) -11.3%.

Source: Barchart.com