Oil heads for weekly gain on supply fears due to US sanctions on Russian companies
Oil prices edged up on Friday, extending the previous day’s surge and on track for a weekly gain as U.S. sanctions on Russia’s two biggest oil companies over the war in Ukraine spurred supply concerns.
Brent crude futures rose 13 cents, or 0.2%, to $66.12 by 1301 GMT. U.S. West Texas Intermediate crude futures also advanced 6 cents, or 0.1%, to $61.85.
"Everyone is waiting for signs of how big the impact is of the new sanctions on Russia. The market is in a wait-and-see mode to see what happens to the flows," said Giovanni Staunovo, commodity analyst at UBS.
Both benchmarks jumped more than 5% on Thursday following the sanctions announcement and were set for about a 7% weekly gain, the biggest since mid-June.
Six-month spreads for Brent and U.S. crude futures returned to backwardation - where contracts for later loading fall below those for earlier loading - having briefly been in contango this week.
That indicates a shift among trader concerns from oversupply to undersupply, allowing them to sell at near-month higher prices instead of paying for storing oil for future sale.
US SANCTIONS TWO MAJOR RUSSIAN OIL SUPPLIERS
U.S. President Donald Trump hit Russia’s Rosneft and Lukoil with sanctions on Thursday to pressure Russian President Vladimir Putin to end the Ukraine war. The two companies together account for more than 5% of global oil output.
Russia was the world’s second-biggest crude oil producer in 2024 after the United States, U.S. energy data showed.
Investors are also focusing on a meeting between Trump and Chinese President Xi Jinping next week as the pair work to defuse longstanding trade tensions and end a spate of tit-for-tat retaliatory measures.
Source: Reuters.com
