Oil Down 6% on the Week as Bears Resume Faceoff With Saudis

Investing.com - Oil bears are back to taunting Saudi Arabia by pressuring the market again, just two days after giving a reprieve to the record sellfoff in crude.

West Texas Intermediate and Brent crude futures settled steady to slightly higher on Friday after rallying more than 2% earlier in the day on fears that the oil-rich kingdom and the OPEC cartel it leads could cut supplies substantially at a December 6-7 meeting. Friday's s rebound didn't help crude's weekly loss of 6%, making it the sixth-straight week in the red.

Prices initially rose on an analysis from tanker-tracking firm ClipperData that showed Saudi Arabia was already loading fewer barrels on ships bound for the United States this month, continuing a trend that began in September.

By sending fewer barrels to the United States, the Saudis hope to starve U.S. crude stockpiles, which have swelled by nearly 50 million barrels the past eight weeks. It’s a strategy the kingdom used last year while working alongside OPEC members, Russia and other producers to rescue oil prices from lows under $50 a barrel.

But after the morning highs in New York trade, prices turned volatile before returning to positive territory just before the close.

Adding pressure to the market was weekly U.S. oil rig data showing drilling activity at its highest in over three years, after an addition of two rigs this week.

“We need a lot more,” positive data, Scott Shelton, broker at ICAP (LON:NXGN) in Durham, N.C., said in his daily oil note that underscored what many analysts were saying: for a rebound to last, the market needs to be jolted with substantial cuts.

U.S. WTI settled flat at $56.46 per barrel after rallying by almost $1.50 earlier in the session. On Wednesday, WTI hit a one-year low of $55.13. With Friday's settlement, it remains about 27% lower from four-year highs of nearly $77 hit in early October.

U.K. Brent settled up 14 cents at $66.76 per barrel, after rallying as much as $1.76 earlier. On , Brent plumbed an eight-month low of $64.61 and remains some 23% lower from last month's peak of nearly $87.

For the week, WTI lost a little more than 6%, while Brent was down by almost 5%.

Since Tuesday’s epic 7% plunge, oil prices have turned choppy as bears turned somewhat cautious on a Reuters report that the Saudis planned to cut global supplies by as much as 1.4 million bpd from an initial planned reduction of 1 million bpd.

The aggressive Saudi stance came amid rising anger in Riyadh at President Donald Trump for giving generous waivers on Iranian oil sanctions after vowing at first to bring Tehran crude exports to zero. It was Trump's war of words against the Islamic Republic that caused oil prices to spike to four-year highs over a five-month period through October, before a record 12-day selloff that followed on his waivers.

"The Saudi’s are still simmering after being hoodwinked, bamboozled and snookered and fooled by President Donald Trump," said Phil Flynn at Chicago's Price Futures Group . "It appears they feel they have been taken by the art of the deal maker and they want to get oil production cut revenge."

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