Oil weekly recap, February 24 – February 28

West Texas Intermediate crude rose on Friday amid market talk of decreased supply from the Bakken shale in North Dakota. The US benchmark rose for an eight straight week and settled the month higher, supported by falling supplies at Cushing, Oklahoma, and short-term cold weather outlook in the US. However, tension in Ukraine reducing the appetite for riskier assets, as well as curbing demand prospects, coupled with refineries entering maintenance at the end of the winter season kept gains in check. Slower-than-expected US GDP growth in the fourth quarter and outlook for softening demand in China also pressured prices. A weaker doll lent support.

On the New York Mercantile Exchange, WTI crude for settlement in April rose by 0.2% on Friday to $102.59 per barrel, having held in a daily range between $101.80 and $102.96 per barrel. The US benchmark fell on Thursday but closed the week 0.4% higher, an eight straight weekly advance, settling the month 5.2% higher.

Meanwhile on the ICE, Brent futures for delivery in the same month rose by 0.1% to $109.07 per barrel on Friday after it lost 0.5% in the preceding day. The European crude benchmark settled the week less than 1% lower and narrowed its premium to its US counterpart to $6.48 a barrel from $6.56 on Thursday, based on closing prices. This was the narrowest since October.

West Texas Intermediate advanced on Friday after data by industry intelligence provider Genscape showed that crude oil loadings at the booming Bakken shale in North Dakota slid by 200 000 barrels per day to 345 000 bpd. The U.S. Department of Transportation however dismissed market talks that new rules requiring crude to be tested by shippers before being transported led to a closure of the Bakken oilfield terminals. Despite the agency calling those claims a “rumor”, WTI still managed to rise and narrow its discount to Brent to the lowest in nearly half a year.

US crude drew support throughout the week after data by the Energy Information Administration showed on Wednesday that supplies at the nations biggest storage hub slid for a fourth straight week after TransCanada commissioned the southern portion of its KeystoneXL pipeline. Supplies at Cushing, Oklahoma, the delivery point for NYMEX-traded contracts, fell to 34.8 million barrels in the seven days through February 21st from 35.9 million in the previous week. Stockpiles declined by 7.04 million barrels in the last four weeks.

However, speculations that demand in the world’s biggest consumer will ease as the winter season draws closer to an end, removing a key support factor, and as refineries shut down for maintenance checked gains. Distillate fuel supplies, which include diesel and heating oil, rose for the first time in seven weeks in the seven days through February 21st, data by the EIA showed on Wednesday, putting WTI on track to post its first weekly decline in seven.

Also weighing on the market, but on the supply side, the Energy Information Administration reported on Thursday that domestic crude production rose to the highest in 25 years in 2013. The shale oil boom led to the increase in domestic output by nearly 1 million barrels per day, the biggest annual increase on record, to an average of 7.46 million bpd, the most since 1989.

A weaker dollar was also positive for the oil complex, although slower-than-expected expansion of the US economy dimmed demand prospects. The Commerce Department reported on Friday that the US economy grew at an annualized 2.4% in the fourth quarter, the preliminary revised reading showed, trailing economists expectations for a drop to 2.5% from the preliminary reading of 3.2% which was released in January. Market players are awaiting the final fourth quarter reading later in March to gauge the strength of the US economy.

The US dollar index, which measures the strength of the greenback against a basket of six major counterparts, fell by 0.7% on Friday to 79.72. The March contract slid to a four-month low of 79.70 earlier in the day and settled the week 0.7% lower following last two weeks combined decline of almost 0.6%. Weakening of the US dollar makes raw materials priced in it cheaper for foreign currency holders and boosts their appeal as an alternative investment.

That appeal however was dampened as tension in Ukraine reduced appetite for riskier assets and also curbed demand prospects as pro-Russian forces took control of the Crimea region and Vladimir Putin received a unanimous approval by his parliament to invade Ukraine, causing Ukraine to mobilize for war on Sunday and call up its reserves.

Concerns over demand from China, the worlds second biggest consumer of oil, also weighed on the oil market as the nations manufacturing activity plunged to an eight-month low in February, government data showed. Chinas National Bureau of Statistics reported on Saturday that its manufacturing Purchasing Managers Index fell to 50.2, beating expectations for a drop to 50.1, but was well below Januarys 50.5. The data underscored challenges which the Chinese government faces as it tries to secure Premier Li Keqiangs bottom line of 7% economic growth, while also attempting to rein in credit growth and overcapacity.

A private survey showed last week that manufacturing activity in the world’s second biggest economy and oil consumer fell to a seven-month low, marking a second month of contraction. The HSBC Flash China Manufacturing PMI slid to 48.3 in February, down from January’s final reading of 49.5, underperforming expectations for a minor-to-no change from the previous month. The Flash China Manufacturing Output Index registered at 49.2, compared to 50.8 in January, also a seven-month low.