Oil Pares Weekly Advance as Dollar Strength Offsets War Concerns
Oil pared its biggest weekly gain in a month as the rally stoked by the Russia-Ukraine war was tempered by a fresh gain in the dollar.
Brent dipped below $74 a barrel, while still up almost 4% for the week. The conflict has rapidly intensified following months of bloody attrition, with the use of longer-rage missiles by both sides this week.
Price pressure on Friday came as the dollar pulled higher, making commodities priced in the currency less appealing. Euro-area business activity unexpectedly shrank in a sign of the risks from heightened discord over trade.
Still, over the course of the week there have been more bullish signs in the crude market. Brent’s nearest timespread hit the strongest level in five weeks — indicating tighter supplies — and an overhang of West African shipments is beginning to ease. Profits from turning crude into fuel have climbed in another positive sign for demand.
Oil has swung between weekly gains and losses since mid-October, influenced by the push and pull of various factors from a strong dollar to ample supply. The Kremlin also revamped its nuclear doctrine this week, although Russia’s foreign minister sought to calm worries about a nuclear escalation.
“What the market fears is accidental destruction in any part of oil, gas and refining that not only causes long-term damage but accelerates a war spiral,” said John Evans, an analyst at brokerage PVM.
The US, meanwhile, sanctioned Russia’s Gazprombank, closing a loophole that Washington kept open over the course of the war because the lender is key for energy markets. The penalties increase the risk of a cut-off of some of the remaining Russian gas flows to a handful of central European nations.
Brent for January settlement was 0.6% lower at $73.76 a barrel as of 8:50 a.m. in New York.
WTI for January delivery was down 0.7% at $69.64 a barrel.
Source : Bloomberg
