During the week, the oil prices experienced spiking, falling back again, and then rising more modestly, registering the biggest weekly gains in months. WTI closed the week at 58.09 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude finished the week at 64.28 dollars a barrel on the London ICE Futures Exchange.
WTI and Brent crude prices have increased 27.95 percent and 19.48 percent, respectively, so far this year, falling from their peak levels in April when the growth of WTI hit over 40 percent, and Brent crude over 30 percent.
During the week, WTI and Brent crude moved in the same directions, and the two-day gains outweighed three-day drops.
Oil prices surged on Monday after drone attacks hit Saudi Arabia's key oil facilities and forced the country to cut its crude oil output by half. According to preliminary estimates, the explosions led to the interruption of a quantity of crude oil supplies estimated at 5.7 million barrels, or about 50 percent of the Saudi Aramco plants' production.
WTI increased 8.05 dollars to settle at 62.9 dollars a barrel, while Brent crude rose 8.8 dollars to close at 69.02 dollars a barrel.
Oil prices started to decline on Tuesday after news reports suggested Saudi Arabia will restore its oil output soon. The trend continued on Wednesday as data showed a surprising increase in U.S. crude oil inventories. For the two days, WTI lost 4.79 dollars and Brent crude decreased 5.42 dollars.
U.S. crude oil inventories increased 1.058 million barrels during the week ending Sept. 13, defying market expected draw of 2.496 million barrels, which implied weaker demand and was bearish for crude prices.
Oil prices rose again on Thursday as the market remained concerned about possible supply shortage. Although Saudi Energy Minister Abdulaziz bin Salman said Tuesday that oil supply will be fully restored by the end of September, analysts said the low global spare capacity at the moment remained a concern for investors and supported oil prices.
WTI edged up 0.02 dollars to settle at 58.13 dollars a barrel, while Brent crude added 0.8 dollars to close at 64.4 dollars a barrel.
On Friday, oil prices declined again despite dropping of the U.S. rig count. WTI lost 0.04 dollars to settle at 58.09 dollars a barrel, while Brent crude decreased 0.12 dollars to close at 64.28 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, mainly because of the concerns over downturn in demand for crude oil.
The slowing global economy continued to be a major headwind for crude oil. The slower economic growth of the world, mainly due to the trade disputes 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.
During the week ending Sept. 20, the U.S. Dollar Index finished on a positive note, surpassing the 98.40 level.
Oil is mostly traded in dollar all over the world and a stronger dollar pressures the oil demand. However, the concerns over crude oil supply following the attacks on Saudi Arabian production facilities have obviously outpaced the worries on the slowing economic growth as well as stronger U.S. Dollar Index level.
For the upcoming week, the market would watch closely the trade talks between China and the United States.
China and the United States held vice ministerial-level trade talks in Washington on Thursday and Friday, and conducted constructive discussions on economic and trade issues of mutual concern.
The two sides also carefully discussed the specific arrangement for the 13th round of China-U.S. high-level economic and trade consultations scheduled for October in Washington. The two sides agreed to continue to maintain communication on related issues.
In the meantime, according to analysts, the outlook of oil prices remains volatile due to Saudi oil crisis. The questions are how quickly the production can be restored, and how much spare capacity there will be left in the oil market.