By Barani Krishnan
Investing.com — Oil bulls starry-eyed over last week’s record U.S. crude exports pushed the commodity’s prices up sharply again on Thursday as headline economic numbers for the third quarter also suggested America was doing better than thought.
A three-day run-up in oil now puts London’s Brent and New York’s West Texas Intermediate, or WTI, crude benchmarks up between 2% and 5% for the week.
In Thursday’s trading itself, , the global benchmark for oil, settled up $1.27, or 1.3%, at $96.96 per barrel for its December delivery contract, extending Wednesday’s 2% rally.
, the benchmark for U.S. crude, settled up $1.17, or 1.3%, at $89.08 a barrel for its December contract, extending the previous session’s gain of 3%.
But the swings in oil of late — that saw WTI jump 16% at the start of October, only to give back 7% the following week — were a caution that the volatility in crude prices was far from over.
People who know the history of U.S. crude oil exports can also point out instances in which the numbers are unusually high for one week, and low for the following week.
“I have read a lot of headlines on record exports of crude last week in the U.S. and quite frankly don’t believe it,” Scott Shelton, an energy futures broker at ICAP in Durham, North Carolina, said, referring to the shipment of 5.129 million barrels per day reported by the Energy Information Administration, or EIA, for the week ended Oct. 21.
Shelton, who typically makes positive comments on oil, said he was more convinced that last week’s exports were at around 4 million barrels per day.
“I assume a correction is coming,” Shelton said, referring to the EIA report for the current week to Oct. 28, which is due Nov. 2. “As for November exports expectations…they are significantly less than October as Europe has taken less barrels as can be seen by the cash markets’ weakness, which should cut exports by about 25% from October in my view — though a late surge can always come.”
The U.S. economy also had problems despite its forecasted growth of 6% for the third quarter, according to Ed Moya, an analyst at OANDA.
The Commerce Department reported that the U.S. economy experienced a 2.6% growth in the third quarter of 2022, following two quarters in which it was negative. Economists expected a growth of 2.4% in this quarter. Oil prices often align with the economy.
“The strong headline number is welcome news, but when you dig into the numbers it is clear that an economic slowdown is here,” said Moya, referring to the third quarter growth number. “The international trade component helped this quarter and that obviously won’t continue going forward. Prices are falling quickly and consumer spending is slowing. Business investment is clearly weakening.”