HOUSTON, June 22 (Xinhua) -- Oil prices ended higher for the week ending June 21, with the price of West Texas Intermediate (WTI) for August delivery increased 9.37 percent, which was WTI's largest weekly percentage gain since November 2016. Brent crude oil for August delivery went up 5.14 percent for the week.
WTI closed the week at 57.43 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude finished the week at 65.2 dollars a barrel on the London ICE Futures Exchange. WTI and Brent have increased 26.47 percent and 21.19 percent, respectively, so far this year.
During the week, WTI and Brent moved in the same direction. The increase of oil prices showed that traders were more concerned about geopolitical challenges, especially the possible deterioration of U.S.-Iran relations. Market also expected trade tensions to ease among major global economies.
Oil prices sank on Monday as fears of shrinking energy demand outweighed concerns over supply. WTI dropped 0.58 dollar to settle at 51.93 dollars a barrel, while Brent crude shrank 1.07 dollars to close at 60.94 dollars a barrel.
On Tuesday, oil prices bounced as market participants cheered at signs of de-escalation of global trade tensions. Both WTI and Brent crude gained more than one dollar, with WTI up 1.97 dollars to settle at 53.9 dollars a barrel and Brent crude gaining 1.2 dollars to close at 62.14 dollars a barrel.
On Wednesday, oil prices settled down despite data showed a larger-than-expected decline in U.S. crude inventories. WTI lowered 0.14 dollar to settle at 53.76 dollars a barrel while Brent crude was down 0.32 dollar to close at 61.82 dollars a barrel.
The U.S. Energy Information Administration reported 3.1 million barrels decrease of crude oil inventories during the week ending June 14. Analysts polled by S&P Global Platts expected a decline of 2 million barrels in crude inventories, on average.
Oil prices rallied on Thursday as the tensions between Washington and Tehran escalated after Iran shot down a U.S. military drone. Both WTI and Brent crude jumped more than two dollars, with WTI gaining 2.89 dollars to settle at 56.65 dollars a barrel while Brent crude up 2.63 dollars to close at 64.45 dollars a barrel.
Oil prices gained on Friday, following a massive rally in the previous session, as fears of deepening U.S.-Iran tensions and potential disruptions in energy supply continued to rattle the market. WTI increased 0.36 dollar to settle at 57.43 dollars a barrel while Brent crude was up 0.75 dollar to close at 65.2 dollars a barrel.
Oil prices have kept gaining momentum since the start of the year due to some geopolitical concerns and OPEC's decision of production cut. The momentum has slowed down recently, mainly because of the concerns over downturn in demand for crude oil.
The slowing global economy continues to be a major headwind for crude oil. The slower economic growth of the world, mainly due to the ongoing trade tensions between the United States and China, will lead to less demand for oil, which in turn would put downward pressure on oil prices.
Moreover, a rising U.S. dollar in the past months has dragged down the greenback-denominated crude futures, as the U.S. Dollar Index has been keeping uptrend since mid-2018. U.S. Dollar Index closed the week at 96.09.
The U.S. Dollar Index is a measure of the value of the U.S. dollar relative to a basket of foreign currencies. Oil is mostly traded in dollar all over the world and a stronger dollar pressures the oil demand.
In the near future, analysts believe concerns over geopolitical challenges and global economic growth will remain as important factors for oil prices. Experts believe the escalation of tensions resulting in oil disruptions would likely cause oil prices to spike. Market participants are also awaiting a decision by the OPEC and other major oil producers including Russia on whether to extend a production cut pact that expires this month.
In the coming week, analysts believe U.S.-Iran relations will continue to take the spotlight. In addition, market is waiting to see any positive signs on global trade which could help ease market fears of a potential slowdown in energy demand.
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