The oil market is set to end the week in a positive mood as geopolitical tensions between Russia, Ukraine and the United States continue to drive the market.
Prices dropped briefly as data revealed that the Euro zone’s business activity contracted in this month.
Prices fell slightly on Friday but Brent and West Texas Intermediate crude oil benchmarks are set to gain nearly 5% in the coming week.
In a recent report, Arslan Ali of Fxempire said that “WTI crude futures rose above $70 per barrel, poised to have their strongest week in the past two months as geopolitical risks increased in energy markets.”
The WTI and Brent oil prices both rose sharply in the past week, as the risk premium returned due to concerns about disruptions of supply from Russia.
Russia and Ukraine have traded blows, intensifying the conflict which has been going on for nearly three years.
Brent crude was trading at around $74 per barrel on the Intercontinental Exchange. The WTI crude was priced at $69.84 on the New York Mercantile Exchange.
Markets are impacted by tensions between Russia and Ukraine
Vladimir Putin, the Russian president, said on Thursday that his country had launched a ballistic rocket at Ukraine.
Putin also warned against a world conflict, as the US and Britain had allowed Ukraine to use its weapons during the war.
Ukraine attacked Russia Tuesday and Wednesday, using weapons made in the US and Britain to strike deep Russian territories.
Analysts at ING Group said that on Thursday, this could lead to Ukraine attacking Russia’s oil installations and causing a disruption in the supply of fuel from one of its top exporters.
Russia’s oil supplies at risk
Reuters, citing industry sources, reported that three refineries in Russia had to reduce or suspend their processing.
The company cited deteriorating profit margins due to higher crude oil prices in the local market and more expensive financial conditions.
The three refineries that were mentioned in the article have also been attacked by Ukrainian drones, who reduced their processing capacities, this year, in June.
Carsten Fritsch is a commodity analyst with Commerzbank AG. He said:
Gasoil crack spreads rose to just below USD 19 per barrel in response to the prospect of a lower Russian diesel export.
The west has also allowed Ukraine to make use of their long-range missiles, increasing the likelihood that more strikes will be made on Russia’s oil installations.
China’s oil imports will rise in November
China’s crude imports will likely rise to 11,4 million barrels a day in November. This is the highest level since August and the third highest level of this year.
This report was made by Reuters based on tanker tracking data and port data compiled Kpler and LSEG Oil Research.
Experts believe this is not a true reflection of the increased demand for oil in China.
The Chinese refineries could have taken advantage of the lower prices to make large purchases and stockpile them.
Fritsch, a Commerzbank employee, said that these purchases will not be required later.
Refineries are unlikely to increase their processing in a noticeable way.
As new developments unfold, this post Oil slips and poised to reach two-month weekly high gains amid tensions could be updated.
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