Oil rose by the most since July, topping $64 a barrel, after US President Donald Trump’s increasingly hawkish rhetoric on Russia sent futures above a key technical level.
Trump on Wednesday said NATO nations should shoot down Russian aircraft that violated their airspace, raising the specter of supply disruption after remarking on Tuesday, that Europe should energy purchases from Moscow. West Texas Intermediate crossed its 100-day moving average of about $64.68.
Commodity trading advisers, which can exaggerate price swings, have been liquidating short positions, which sat at 36% on Monday, compared with 55% on Sept. 23, according to data from Bridgeton Research Group.
Meanwhile, Russia mulled restrictions on diesel exports for some companies following a spate of attacks by Ukrainian drones on its energy infrastructure, including pipeline facilities, that have put the nation’s supply in focus. Gasoil, a category that includes diesel, settled 2.4% higher in Europe on Tuesday, its biggest gain in three weeks, while diesel traders piled into bets on a surging diesel market.
“Crude continues to march higher today as geopolitical headlines escalate across several regions, while Ukraine’s strikes on energy infrastructure are impacting product flows and could eventually spill over into crude exports if unresolved,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group.
Oil is little changed this month as traders weigh a bearish fundamental outlook against long-running geopolitical tensions. On the supply front, Iraq is finalizing a deal to restart crude exports from its Kurdistan region following a two-year halt. That could bring about 230,000 barrels a day back to the international market, exacerbating a looming glut.
Some market metrics are strengthening, with WTI’s prompt spread — the difference between its two closest contracts — at 51 cents a barrel in backwardation, almost doubling from a week ago. Meanwhile, the difference between the two closest December contracts widened to $1.89 a barrel from less than 70 cents a fortnight ago.
Oil Prices
WTI for November delivery rose 2.5% to settle at $64.99 a barrel in New York.
Brent for November settlement climbed 2.5% to settle at $69.31 a barrel.
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