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Futures Movers: Oil futures end mixed, score gains for week and month

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Oil futures saw choppy trading on Friday, with U.S. prices ending the session lower following five consecutive session gains, but prices tallied a rise for the week, as well as the month of May.

The moves for oil come just a day after prices for U.S. benchmark crude marked their highest settlement since 2018.

“Traders are optimistic that demand growth will accelerate with the U.S. economy picking up steam,” Marshall Steeves, energy markets analyst at IHS Markit, told MarketWatch. “The growth in the U.S. is expected to overwhelm the drag of weakness in India and Southeast Asia.”

On Friday, West Texas Intermediate crude for July delivery 
CLN21,
-0.60%

CL00,
-0.60%

fell 53 cents, or 0.8%, to settle at $66.32 a barrel on the New York Mercantile Exchange following five consecutive gains. Prices based on the front-month contract on Thursday rose 1% to mark the highest settlement since Oct. 29, 2018.

The front-month July Brent crude
BRNN21,
+0.27%
,
which expired at the end of the session, climbed 17 cents, or 0.2%, to end at $69.63 a barrel on ICE Futures Europe, with prices marking their highest finish since March 11 of this year, according to Dow Jones Market Data.

August Brent contract
BRNQ21,
+0.19%
,
which is now the front month, fell 48 cents, or 0.7%, to settle at $68.72 a barrel.

Based on the front-month contracts, WTI crude rose 4.3% for the week, as well as the month. Brent saw a weekly advance of 4.8% and monthly climb of 3.5%.

“The U.S. economy is firing on all cylinders, with good news in every direction,” said Manish Raj, chief financial officer at Velandera Energy. “Improvements in the labor market, the housing market and consumer sentiment have solidified the demand recovery picture” for oil.

Traders also awaited the outcome of a meeting on Tuesday of OPEC+, the Organization of the Petroleum Exporting Countries and their allies, who will assess the latest oil-market conditions and decide on production levels. “We believe that OPEC+ will reaffirm its production hike next week, as demand fundamentals have only improved since the previous alliance meeting,” said Raj.

Read: Here’s what’s in store for Tuesday’s OPEC+ meeting

A current OPEC+ agreement calls for a gradual increase in production, which began in May and will run through July.

Some commodity experts expect that OPEC+ may adjust its plans to ease output limits based on expected Iranian production, with negotiations between Washington and Tehran under way since April.

“There remains uncertainty around the Iranian nuclear talks, which could result in a nuclear deal and possibly a quick rise in crude oil exports,” as much as 1 million barrels a day, if successful, said Steeves.

However, he said that “no change to current policy is expected.”

Meanwhile, the recovery in the U.S. from COVID is giving way to rising demand for crude and its byproducts, analysts say.

Data from the Energy Information Administration released Wednesday showed weekly declines for domestic crude, gasoline and distillate supplies.

Still, Baker Hughes on Friday reported that the number of active U.S. drilling rigs for oil was up a fourth straight week, up three at 359 this week, implying that an increase in oil production may be on tap.

On Friday, June gasoline
RBM21,
-0.79%

fell 0.5% to $2.14 a gallon, with prices up nearly 3.5% for the week and up 3.4% for the month.

Read U.S. gasoline demand may hit a record this summer: GasBuddy

Also read: The price of meat this Memorial Day weekend may cause you to reach for the veggie burgers

June heating oil
HOM21,
-0.86%

added 0.6% to about $2.04 a gallon, settling 2.8% higher for the week, with a monthly rise of 6.4%. The June contracts expired at the end of the trading session.

July natural gas
NGN21,
+0.91%

tacked on almost 1% to settle at $2.99 per million British thermal units. Prices based on the front-month contracts ended 0.3% higher for the week and were up nearly 1.9% for the month.

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