West Texas Intermediate climbed more than 1% to settle above $71 a barrel, an increase of more than 6% for the week, while Brent settled above $75 for the first time since Nov. 7. The Russia-Ukraine conflict has rapidly intensified following months of bloody attrition, with the use of longer-range missiles by both sides this week. At the same time, Iran said it will increase its nuclear fuel-making capacity after it was censured by the UN’s International Atomic Energy Agency.
A gain in equity markets also gave crude a boost, though the rally was capped by a stronger dollar that makes commodities priced in the currency less attractive. Euro-area business activity unexpectedly shrank, a sign of the risks from heightened discord over trade.
Still, bullish signs for crude emerged this week. WTI’s nearest timespread strengthened to 48 cents — indicating tighter supplies — after briefly flipping into a bearish contango structure earlier this week for the first time since February.
Oil has swung between weekly gains and losses since mid-October, with a strong dollar, ample supply and indications of weak demand providing headwinds. At the same time, geopolitical tensions — including the Kremlin’s revamp of its nuclear doctrine this week — have caused temporary gains but failed to provide an extended uplift in the face of widespread expectations of a crude surplus next year.
“The market is still complacent about geopolitical disruption risk,” Bob McNally, president of Rapidan Energy Group, said in a Bloomberg Television interview. “President Trump will be willing to crimp Russian energy exports to get leverage for deals he wants to cut.”
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.
