Baker Hughes Says U.S. Weekly Rig Count Increased by 14

International Brent crude oil and U.S. West Texas Intermediate crude oil futures traded steady on Friday, closing inside the previous day’s range. However, it did close with modest gains after receiving a double-digit breakdown the previous week.

The price action suggests that the previous week’s decline may have just been a position-adjustment by the hedge funds and that longer-term investors are still facing the same two major factors – the impact of the first oil cut from OPEC against rising U.S. shale oil output and high inventories.

In other news, Baker Hughes reported that the U.S. weekly rig count increased by 14 drilling rigs last week. This number means that the potential for increased U.S. production continues to build.

Earlier in the week, the International Energy Agency essentially said OPEC’s plan to cut output could create a deficit this year. However, it looks as if traders want to see more evidence. Prices even failed to rebound late in the week after Saudi Arabia Minister Khalid al-Falih said on Thursday the cuts by OPEC and non-OPEC producers could be extended beyond the June deadline if oil stockpiles stayed above long-term average.

Gold

April Comex Gold closed higher on Friday, but inside the previous day’s range, indicating a little investor indecision and impending volatility. Nonetheless, the market did post its first weekly gain since February, mostly in response to the drop in the U.S. Dollar to a five-week low. Gold firmed and the dollar weakened after the U.S. Federal Reserve disappointed investors who had hoped for a more hawkish tone regarding the frequency and the number of interest rate hikes this year.

Also supporting gold is Trump’s failure to deliver his promised tax cuts and regulatory reform. Finally, investors were looking ahead to the Group of 20 finance leaders’ meeting in Germany this weekend. Experts say the Trump administration may try to pursue protectionist policies which could increase demand for gold as a safe haven investment.

U.S. Stock Market

Stocks were mixed for a second day, but financial and health care stocks continued to weaken in response to the Fed’s monetary policy statement and Trump’s healthcare plan respectively.

Volume across the U.S. exchanges surged, topping 9.4 billion, the most since December 16. This was related to the quadruple “witching,” or the expiration of three related classes of options and futures contracts, along with individual stock futures options.

Economic Reports

Industrial production was unchanged for February. Capacity utilization edged 0.1 percent lower to 75.4 percent. The University of Michigan preliminary read on consumer sentiment for March was 97.6.