Oil set for longest weekly loss streak since 1998

SAN FRANCISCO (MarketWatch) — Oil futures were set to log a sixth consecutive week of losses on Friday, their longest stretch of weekly declines in about 15 years, as traders continued to fret over the large overhang in U.S. crude supplies.

At last check, prices rebounded a bit, with December crude (CLZ3)  tacking on 15 cents, or 0.2%, to $93.91 a barrel, after slipping 12 cents Thursday on the New York Mercantile Exchange.

But prices traded about 0.7% lower than last Friday's close, according to FactSet data tracking the most-active contracts. Last week, prices lost just a penny but the tally over the past five weeks shows losses of more than 9%. Prices were ready to mark another loss this week, which'll mark six in a row — and longest stretch of weekly losses since 1998, FactSet data show.

Bloomberg Enlarge Image

On the ICE Futures exchange, January Brent crude (UK:LCOF4)  traded at $108.23 a barrel, down 5 cents. Prices, which rallied Thursday amid ongoing worries about oil supplies Libya and the expiration of the December Brent contracts, readied for a weekly gain of roughly 3%. That would be the first weekly gain in five weeks.

The spread between Brent crude and West Texas Intermediate crude traded on Nymex narrowed a bit on Friday, after having climbed above $15 a barrel during Thursday's trading session. That was the highest since March.

Blog: Energy Ticker
A blog about how to profit from the global energy market.
• Follow @EnergyTicker
/conga/story/misc/energy_ticker.html 281319

Nymex prices have risen slightly as investors responded to dovish comments from Janet Yellen, the Federal Reserve's vice chairwoman, "who hinted that the Fed will keep the [quantitative-easing] tap running at full throttle for the foreseeable future," said Fawad Razaqzada, technical analyst at GFT Markets, in a note.

During testimony to the Senate on Thursday, Janet Yellen — who's the nominee to replace Ben Bernanke as head of the Fed — defended the central bank's bond-buying program and said its benefits outweigh the costs.

The Fed's current policy is considered negative for the U.S. dollar and bullish for dollar-denominated commodities such as crude oil.

This has helped overshadow the ongoing concerns over excess supply of oil, but eventually investors will focus on the demand side of things which is not looking good, Razaqzada said in a note.

In terms of economic data Friday, figures showed that the Empire State's general business conditions index turned negative in November for the first time in May, with the reading falling to a negative 2.2.

U.S. industrial production fell 0.1% in October — the first decline since July, although MarketWatch-polled economists expected no change.

The market has been looking to economic data for clues on when the Fed will taper its stimulus program.

On the one hand, the weaker U.S. trade data reported this week "means the GDP estimates will probably be revised downward in the next release, European GDP numbers were weak and there is uncertainty about how Chinese economic reforms will impact oil consumption," said James Williams, an energy economist at WTRG Economics, noting that all of these factors are negative for oil prices.

Click to Play U.S. Oil production now exceeds imports

U.S. oil production in October exceeds imports for the first time in 18 years, according to the U.S. Energy Information Administration.

The modest losses for Nymex oil on Thursday came amid U.S. government data showing a rise in crude supplies for the eighth straight week, though prices had briefly turned higher following Yellen's comments.

In other energy trading Friday, December gasoline (RBZ3)  slipped by 2 cents, or 0.8%, to $2.66 a gallon on Nymex, giving back part of an almost 6-cent rise the day before. Prices traded more than 4% higher than a week ago.

December heating oil (HOZ3)  added less than a penny to trade at $2.94 a gallon, up about 2.3% on the week, while December natural gas (NGZ13)  was at $3.65 per million British thermal units, up nearly 5 cents, or 1.3% — trading 2.6% higher for the week.

For natural gas, Tim Evans, energy analyst at Cit Futures sees room for prices to work higher overall, "but the big week-to-week swings in heating demand and storage flows may produce some chop."