Oil futures endure another volatile session as Brent heads for biggest weekly loss since March

Oil futures endured another volatile session on Friday (21 April) despite overnight hints by Saudi Arabia's energy minister Khalid Al-Falih that a deal, aimed at extending output cuts beyond June, might be on the cards.

Headline contracts endured topsy-turvy trading patterns overnight in US and Asian morning calls, before a modicum of stability returned during European trading hours. At 2:09pm BST, the Brent front month futures contract was up 0.11% or 6 cents to $53.05 per barrel, heading for its biggest weekly loss since March, while the West Texas Intermediate was broadly flat at $50.71 per barrel.

Speaking at a conference in the Middle East on Thursday, Al-Falih said: "The consensus is building [on extending output cuts] but it's not done yet."

Kuwait's oil minister Essam al-Marzouq also said he expected the agreement to be extended. "Russia is on board preliminarily and compliance from Russia is very good."

However, Reuters reported that Russia's Energy Minister Alexander Novak declined to say whether the Kremlin would adhere to an extension before a joint meeting on May 25, saying global stocks were declining. "The situation has gradually been improving since the beginning of March," he noted further.

Analysts at Vienna-based JBC Energy said: "Verbal support from Opec members suggesting that there is a building consensus amongst producer countries that output cuts should be extended beyond the middle of the year appears to have had little impact so far.

"Meanwhile, pressure in physical crude is becoming more difficult to ignore: timespreads in both Brent and Dubai crude are currently both showing the widest contango in several months, while the front end of the Brent contract for difference (CFD) curve has slumped further in recent days."

The historic Opec and non-Opec output reduction pact, a first of its kind in 15 years, was inked by both sets of producers in December 2016. It was designed to take almost 1.8m barrels per day (bpd) of crude oil production offline and is due to expire towards the end of June.

Some market commentators see little need for Opec to extend the cuts. Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB, said: "Not only is there no need for it, but it would also create a risk of more stimulus of the US shale oil sector, which might make it difficult for Opec to re-enter the market again with its full volume at a later stage."

Away from the oil market, gold market remained decidedly lacklustre. At 2:32pm BST, the Comex gold futures contract for June delivery was up 0.09% or $1.20 at $1,282.80 an ounce, while spot gold was trading at $1,282.80 an ounce, up 0.07% or $0.90.

Nonetheless, risk aversion remains rife, according to FXTM research analyst Lukman Otunuga. "Jitters surrounding the forthcoming French presidential elections and the ongoing tensions engulfing North Korea have supported gold this week.

"If mounting concerns over Trump's ability to push through with fiscal spending continue to pressure the dollar further, then gold may target $1,300 and potentially higher. Much attention will also be directed towards the French elections this weekend and could spark a wave of risk aversion if the results of the first round rekindle Frexit concerns."

Elsewhere in the precious metals market, Comex silver was down 0.63% or 11 cents to $17.91 an ounce, while spot platinum was 0.05% or $0.53 higher at $979.70 an ounce.