Brent Posts Big Weekly Gain On Russia/NATO Tensions

Meanwhile, Chinese terminals target that country's shadow fleet: File Image/Pixabay

Russian oil infrastructure damaged by Ukraine drones coupled with increasing pressure to deal decisively with Russia was the one-two punch that again caused another round of gains for crude on Friday, as well as a substantial weekly boost.

Brent settled up 71 cents at $70.13 per barrel, while West Texas Intermediate settled up 74 cents at $65.72 per barrel; for the week, Brent was up 5.2 percent.

John Kilduff, founding partner at Again Capital, encapsulated Friday's trading succinctly: "These drone attacks by Ukraine are beginning to add up."

Geopolitical tensions also intensified with reports of Russia invading NATO airspace, and officials familiar with the exchange told media that European diplomats warned the Kremlin that NATO is ready to respond to further violations of its airspace with full force, including shooting down Russian planes.

Bloomberg noted that in another sign of emerging bullish sentiment, "commodity trading advisers, which tend to amplify price swings, flipped to net-long on Friday for the first time since early August…..algorithmic traders are now sitting 27 percent long in Brent compared with 27 percent short just a day earlier.

Also supportive to oil trading, according to Andrew Lipow, president of Lipow Oil Associates, was hawkish U.S. president Donald Trump, who he said, "Continues to pressure U.S. allies to reduce Russian imports…we might see India and Turkey reduce some of their Russian imports."

Even earlier concerns that improved U.S. economic data may cause the U.S. Federal Reserve to halt any further interest rate cuts seem to be forgotten on Friday, with Kilduff stating, "U.S. economic data has been OK, and with the Fed easing interest rates that will contribute to demand."

In other oil news Friday, in a move seeming to be aimed at China's shadow fleet, several terminal operators in China's Shandong province plan to ban entry to old vessels with fake or suspicious certificates starting in November.

Operators Qingdao Haiye Oil Terminal Co, Qingdao Shihua Crude Oil Terminal Co, Qingdao Gangxin Oil Products Co, and Qingdao Lixing Logistics Co last week issued an official notice for the Huangdao Port, according to Reuters, which had seen the communication banning tankers operating for 31 years or more and vessels using fake International Maritime Organization identification numbers from docking at the Huangdao Port terminals.