Oil notched its biggest weekly gain in more than three months as mounting pressure on Russia to end its war in Ukraine muddies the outlook for exports from the OPEC+ member, with algorithmic traders adding momentum to the rally.
Global benchmark Brent advanced to settle above $70 a barrel for the first time since late July, and was up roughly 5.2% this week, while West Texas Intermediate closed near $66.
The commodity followed broader markets higher on Friday amid stronger-than-expected US economic data, which allayed fears of near-term demand deterioration. The dollar weakened, making commodities priced in the currency more attractive.
The equities move compounded earlier gains on a confluence of bullish geopolitical developments. Trump pressed Turkey to stop buying oil from Russia, said he would ask Hungary to do the same and earlier in the week rebuked NATO members for buying fuel from the OPEC+ producer.
The mounting pressure comes as Ukraine has stepped up drone strikes against Russian energy infrastructure. Meanwhile, European diplomats warned the Kremlin this week that the North Atlantic Treaty Organization is ready to respond to further violations of its airspace with full force, including by shooting down Russian planes, according to officials familiar with the exchange.
The United Nations, meanwhile, will reimpose broad sanctions on Iran after days of diplomacy in New York failed to ease a standoff over Tehran’s nuclear program.
“It’s a risky market in which to be short at the moment, made ever more risky by the still elevated speculative shorts that have been accumulated across the crude complex,” said Rory Johnston, oil market researcher and founder of Commodity Context.
In another sign of heightened bullishness, commodity trading advisers, which tend to amplify price swings, flipped to net-long on Friday for the first time since early August, according to data from Bridgeton Research Group. Algorithmic traders are now sitting 27% long in Brent compared with 27% short just a day earlier, Bridgeton said. US benchmark WTI turned flat, the firm said.
This week’s gain stands to lift oil out of the tight trading band it’s been in since early August, as investors weigh a loose market balance against rising geopolitical tensions. Forecasters including the International Energy Agency anticipate a surplus later this year, driven by increased output from OPEC and its partners, as well as from producers outside the group, especially in the Americas.
Global supplies are set to increase further as exports from the Kurdistan region in Iraq through a pipeline to Turkey’s Ceyhan port are set to resume Saturday. Following a halt of more than two years, the resumption of shipments will initially bring 230,000 barrels a day to international markets, rising to as much as half a million barrels a day in future.
OIl Prices
WTI for November delivery rose 1.1% to settle at $65.72 a barrel.
Brent for November gained 1% to settle at $70.13 a barrel.
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