“The continued heavy downside pressure on the nearby WTI contract going into today’s expiration is sending off a few major bearish signals, suggestive of additional price weakening ahead”, said Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch & Associates.
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Underscoring the volatility in the oil market, both benchmarks are up for the week, by about 1.5%, after dipping to multi-month lows below $40 a barrel earlier in the week. Oil prices have been locked in a tight range below $50 a barrel in recent months as investors weigh the damage low prices have inflicted on the industry against the continuing high level of oil stocks around the world. WTI futures for December delivery were up 19 cents at, $40.74 a barrel, paring earlier losses, while WTI for January deliver held 92 cents higher, at $42.64 a barrel.
Front end Brent crude oil futures were trading slight higher on Friday despite a three month low due to oversupply concerns.
The bank noted the spread between near-month futures and December 2016 contract prices has hit a new record of almost $8 a barrel. For instance, the United States Short Oil (NYSEArca: DNO) tracks the opposite moves of the West Texas Intermediate crude oil futures, and the DB Crude Oil Short ETN (NYSEArca: SZO) also tracks the simple inverse of oil.
For the week, Brent rose 2 percent while WTI fell 1 percent.
Market participants are expecting the latest oil rig count out of the USA later Friday. “We should change this policy in order for the U.S.to be a global leader and to support our allies by making them less dependent on energy from hostile nations”.
Stockpiles rose by 252,000 barrels last week, keeping supplies more than 100 million barrels above the five-year seasonal average, according to the Energy Information Administration.
Following the eighth successive weekly inventory rise, at 487.29 million barrels, current crude supplies are up 27.9% from the year-ago period and are near the highest level during this time of the year in 80 years at least. USA crude has weakened in four straight sessions against Brent.
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At the same time, increased competition from American exports would likely moderate global oil prices, resulting in lower gas prices (up to 13 cents a gallon) at the pump, according to estimates reviewed by the Government Accountability Office, and published in its July report on lifting restrictions.
