Oil Pares Weekly Loss Against Backdrop of Sanctions and Surplus
Oil rose, paring a second weekly loss, as the market continued to weigh the threat to output from sanctions on Russia against a looming oversupply.
US crude futures recovered to trade near $60 a barrel, but were still down for the week. Adding to fears of a glut, oil has also been buffeted by swings in equity markets this week.
Meanwhile, the White House’s move to clamp down on the buying of Russian crude led oil trading giant Gunvor Group to withdraw an offer for the international assets of Lukoil PJSC. The fate of the assets, which include stakes in oil fields, refineries and gas stations, remains unclear.
Senior industry figures have warned the latest US curbs on Russia’s two largest oil companies are beginning to have an impact on the market, particularly in diesel, where prices have been surging in recent days, with time spreads for the fuel signaling supply pressure.
At the same time, the US measures have come against a backdrop of oversupply that has weighed on key crude oil metrics. The spread between the nearest West Texas Intermediate futures closed at the weakest level since February on Thursday.
Supplies from both within and outside of the Organization of the Petroleum Exporting Countries and its allies are set to surge at the end of this year and into 2026, with the International Energy Agency expecting a record oversupply. While the rising volumes of oil are beginning to show up on tankers, key storage hubs aren’t yet feeling the impact. US oil inventories ended October lower than where they started the month.
“The market continues to weigh a rising oil surplus against mixed macro,” said Ole Hvalbye, a commodities analyst at SEB AB. “On the technical side, Brent still looks like it’s in a normal correction within a broader uptrend.”
In Asia, China — the second-largest crude consumer — said on Friday that imports rose in October from a year ago. But the country’s pace of stockpiling is expected to slow, potentially removing a support for prices.
Next week, traders will be looking to a raft of reports, including from the IEA and OPEC, to get further insights into the supply-demand balance as the year-end approaches.
Brent for January was 0.58% higher at $63.75 as of 8:35 a.m. in New York. WTI for December delivery rose 0.69% to $59.84 a barrel.
Source : Bloomberg.com
