Oil Ends On Daily, Weekly Gains As Russia Triggers Surge In Supply Concerns

Meanwhile Middle East tensions flare up again: File Image/Pixabay

Another attack by Ukraine damaging Russian oil infrastructure caused two key benchmarks on Friday to rise more than 2 percent, contributing to weekly gains and validating earlier supply tightness concerns.

After a drone attack forced Russia's port of Novorossiisk to halt oil exports, Brent settled up $1.38, or 2.1 percent, at $64.39 per barrel; West Texas Intermediate settled up $1.40, or 2.3 percent, at $60.09 per barrel.

For the week, Brent rose 1.2 percent, and WTI posted a weekly gain of around 0.6 percent.

Phil Flynn, senior market analyst with Price Futures Group Inc., said of the drone attacks, "The hit on that Russian terminal was huge and seems to have had a bigger impact than previous attacks," referring to the fact that Transneft suspended crude supplies to the outlet to the tune of 2.2 million barrels per day (bpd).

Meanwhile, about 1.4 million bpd of Russian oil was added to stocks held on tankers plagued by unloading slowdowns due to the U.S. sanctions against Rosneft and Lukoil, according to JPMorgan.

Supporting trading on Friday was news that China's crude imports from January to October rose 3.1 percent year to year – which presumably further mollified the chronic glut concerns that had been dogging oil trading for months now.

In other oil news on Friday, Baker Hughes reported that the number of active U.S. oil rigs in the week ending November 14 rose by 3 rigs to 417, above the 4-year low of 410 rigs set on August 1. 

Also on Friday, the Marshall Islands-flagged oil tanker Talara en route to Singapore was seized by Iranian forces in the Gulf of Oman after having passed the Strait of Hormuz from Ajman; it was taken to Iranian territorial waters, according to a U.S. defense official.

The incident, which Iran has not yet acknowledged, presumably reignites tensions in the Middle East.