Crude oil closed April with a fifth consecutive monthly gain as supply challenges from Russia’s war in Ukraine outweighed worries over demand tied to China’s COVID-19 lockdowns.
WTI futures (CL1:COM) for June delivery rose 2.6% for the week and 4.4% for the month to $104.69/bbl, while June natural gas (NG1:COM) soared 28.4% in April to $7.244/MMBtu for its best monthly gain since 2009, and May heating oil futures (HO1:COM) expired at an all-time high near $5.86/gal.
Crude is rallying with demand concerns seen as short-term while supply concerns are persistent, CIBC Private Wealth Management’s Rebecca Babin told Bloomberg, adding that next week will bring official selling prices from Saudi Arabia “as a good litmus test for how much demand is suffering in China.”
With the war entering its third month, Germany reportedly withdrew its objection to a European Union embargo on Russian oil, with an announcement possibly coming next week, which could remove ~1M bbl/day of supply from global markets.
Big Oil is benefiting from the high prices and rising demand, with Exxon Mobil (XOM) and Chevron (CVX) posting big profit jumps for the second straight quarter: Exxon racked up $5.5B in earnings for Q1, doubling the amount from the year-earlier quarter, and Chevron scored $6.26B in Q1 earnings, more than 4x its profit in the same period last year.
But both companies said their global production fell in Q1, with Chevron dropping 8% and Exxon sliding 4%.
The S&P energy sector (NYSEARCA:XLE) ticked lower for the week, -1.3%, but remains the full-year leader, up 35%.
The week’s top 5 gainers in energy and natural resources: (NYSE:ARCH) +24.2%, (NRT) +23.4%, (AMR) +19.7%, (TREC) +18.7%, (ARLP) +15%.
The week’s top 5 decliners in energy and natural resources: (NASDAQ:HPK) -27.5%, (PEGY) -26.4%, (IPI) -19.5%, (IREN) -18.5%, (CENX) -18.5%.