Oil futures: Prices rebound 5% amid heightened geopolitical risks
Quantum Commodity Intelligence – Crude oil futures Friday were sharply higher but remain volatile amid uncertainty over the geopolitical situation and mixed economic signals.
Front-month Dec23 ICE Brent futures were trading at weekly highs of $90.73/b (1705 GMT), compared to Thursday's settle of $86.00/b.
At the same time Nov23 NYMEX WTI was trading $87.45/b versus Thursday's settle of $82.91/b.
Last Friday, Dec23 Brent closed at $84.58/b, while Nov23 WTI settled at $82.79/b.
Prices strengthened after the US and Qatar agreed to stop Iran from accessing $6 billion of funds recently transferred from South Korea, while traders are looking for any sign of a clampdown on sanctions avoidance on Iranian crude exports to China.
But Iran's oil minister said Friday the country is currently producing over 3.3 million bpd and plans to increase output further, citing strong demand.
Meanwhile, Israel's Tamar gas field remains closed, which in turn helped European TTF benchmark gas prices surge around 50% this week.
The US has also sanctioned on two shipping companies for breaches of the price cap imposed on Russian oil sales, the first time such penalties have been applied, tightening the screw on firms flouting the $60/b price cap.
Support
Markets have also found support after Saudi Arabian energy minister Prince Abdulaziz bin Salman said Thursday the Kingdom's voluntary crude output reduction will continue for as long as necessary, which could include an extension into 2024.
Prices had increased during the previous session after monthly agency reports, including IEA and OPEC, remained reasonably upbeat on demand growth but later buckled after the EIA weekly report showed a sharp build in US stocks as production levels surged.
"US crude oil production reached a record 13.2 million bpd according to weekly estimates from the EIA, putting growth on track to exceed 1 million bpd this year. Shale producers must be sending a warm thank you to Saudi Arabia and their willingness to sacrifice market share to support prices," said Ole S Hansen, Head of Commodity Strategy at Saxo Group.
The delayed Weekly Petroleum Status Report showed commercial crude stocks at a seven-week high of 424 million barrels, up 10.2 million barrels over the week, coming after API data recorded a build in US inventories of closer to 13 million barrels.
Prices were also hit by the rising dollar after inflation increased, which added to prospects the Federal Reserve will maintain higher interest rates for longer.
The consumer price index increased 0.4% on the month and 3.7% from a year ago, with higher gasoline prices the main culprit driving inflation last month.
