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Energy was the only gainer among the 11 S&P sectors this week, as Russia’s planned production cut next month in reprisal for Western sanctions capped crude oil’s more than 8% run-up for the week.
Russia’s move was largely expected, and most analysts have “already penciled in” Russian production falling by 700K-900K bbl/day this year, according to Rebecca Babin, senior energy trader at CIBC Private Wealth U.S.
Front-month Nymex crude (CL1:COM) for March delivery closed +8.6% to $79.72 for its best weekly showing since October, and April Brent crude (CO1:COM) settled +8% to $86.39/bbl, both snapping back-to-back weekly losses.
Meanwhile, Nymex natural gas (NG1:COM) for March delivery broke a seven-week losing streak, finishing +4.3% to $2.514/MMBtu.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (DBO), (DRIP), (GUSH), (USOI), (NRGU)
The consensus among oil watchers is for lower crude prices this year, and commodities bull Goldman Sachs this week cut its average Brent spot price forecast for 2023 to $92/bbl from its prior outlook for $98/bbl oil – and not reaching $100 until December – while also lowering its WTI spot price forecast for 2023 to $86/bbl from $92/bbl previously.
But OPEC sources told Reuters this week they believe an oil price rebound is more likely this year, with a growing number seeing a possible return to $100/bbl.
Reuters said it spoke privately to five OPEC country officials about the prospect of $100 oil, with three seeing oil as more likely to rally in 2023 than decline and two predicting prices heading back to $100.
The lifting of China’s COVID restrictions should boost oil demand growth in 2023, while OPEC members are pumping nearly 1M bbl/day less than their target, according to the group’s own figures and other estimates.
The top oil and gas ETF – the Energy Select Sector SPDR Fund (NYSEARCA:XLE) – closed +5% this week.
Top 10 gainers in energy and natural resources during the past 5 days: (NYSE:DHT) +22.5%, (NGL) +20.2%, (WFRD) +19.1%, (BORR) +17.1%, (FLUX) +15.9%, (BP) +15.6%, (STNG) +14.8%, (DFLI) +14.6%, (NM) +13.8%, (EQNR) +13.4%.
Top 5 decliners in energy and natural resources during the past 5 days: (ODV) -23.2%, (AZRE) -18.2%, (CMP) -18.1%, (FCEL) -16.1%, (FEAM) -15.2%.
Source: Barchart.com
