Crude Oil Futures Down for the Week

The November WTI – West Texas Intermediate crude oil futures contract price gained a penny Friday, settling at $74.34. The WTI intraday range fluctuated from $73.83 to $75.22. Friday’s settlement price represents a 1.3-percent drop since Monday’s close.

The front-month Brent contract lost 42 cents Friday to settle at $84.16 a barrel – a nearly 1-percent drop from Monday’s settlement price.

“This week, both WTI and Brent traded at levels not seen in about four years on supply concerns only to fall off later on a U.S. crude inventory report that showed a much higher-than-expected gain,” said Tom Seng, Assistant Professor of Energy Business at the University of Tulsa’s Collins College of Business. “Iran sanctions took center stage as the country’s exports have already fallen by an estimated 1 million barrels and U.S. sanctions kick in next month.”

Seng also noted that concern exists over OPEC’s ability to make up for the shortfall in Iranian production. A U.S. Energy Information Administration (EIA) report Wednesday offset the uptick by showing that crude inventories last week increased by 8 million barrels, he added.

“The WTI/Brent spread sits at nearly $10,” noted Seng. “Technically, CLX18 (the November 2018 WTI) is slightly over-bought and is trading above its 20-day moving average. That could set the stage for lower prices ahead. The November 2018 WTI contract settles on 10/22/18.”

The price of a gallon of reformulated gasoline (RBOB) for November delivery dropped by 14 cents Friday to settle at $2.09. In-sync with light crude, RBOB has followed a similar up-and-down pattern recently, said Seng.

Finished gasoline inventories increased last week but look for more U.S. refinery capacity to go offline as they enter their ‘turnaround’ period to prepare for winter blends,” Seng noted. “This could lead to higher prices in the short-term

Although it dipped by two cents Friday to settle at $3.14, the Henry Hub natural gas contract price for November has received enough support this week to stay “solidly above” the $3.00 mark, noted Seng.

A forecast for early cold led to an initial spike, which later fell lower on a higher-than-expected injection into storage,” explained Seng. “Despite storage levels that are still about 18 percent below the five-year average for this time of year, the market appears to be taking comfort in the record high daily production, currently at over 84 billion cubic feet per day

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