Oil settles up, notches weekly gain on tight supply, Middle East
conflict
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[February 10, 2024] By
Laura Sanicola
(Reuters) -Oil prices settled higher on Friday, up about 6% on a
week-on-week basis, as worries about supply from the Middle East mounted
and as reining outages tightened refined products markets.
Brent crude futures settled up 56 cents, or 0.7%, at $82.19 a barrel.
U.S. West Texas Intermediate crude futures settled up 62 cents or 0.8%,
at $76.84 a barrel.
Oil futures rose throughout the week, buoyed after Israeli Prime
Minister Benjamin Netanyahu's rejection of a Hamas ceasefire proposal on
Wednesday. This week's rise followed a 7% loss in the prior week.
"We believe that this type of week-to-week wide price swings will
further characterize the crude markets through the rest of this month
short of major bullish headlines out of the Mideast that could force
adjustment in global oil balances," said Jim Ritterbusch, president of
Ritterbusch and Associates LLC in Galena, Illinois.
U.S. energy firms this week also added 4 oil and natural gas rigs to 623
this week, its highest since mid-December, energy services firm Baker
Hughes said in its closely followed report.
U.S. domestic production returned this week to a record 13.3 million
barrels per day level, according to the U.S. Energy Information
Administration. Last month, frigid weather caused widespread shut-ins in
oil producing regions.
Israeli forces on Friday continued deadly air strikes on the Gaza Strip.
On Thursday, the bombing of the southern border city of Rafah helped
boost oil prices by around 3%.
"With the words that, 'no part of the Gaza Strip would be immune from
Israel's offensive', it was not hard for oil participants to conclude
that without even a passing regard for peace, there was not enough
conflict-premium priced in," said John Evans, an analyst at PVM.
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A person puts gas in a vehicle at a gas station in Manhattan, New
York City, U.S., August 11, 2022. REUTERS/Andrew Kelly/File Photo
Crude futures were also supported by strength in gasoline and diesel
prices as significant U.S. refinery downtime, both planned and
unplanned, tightened product markets.
Gasoline futures rose about 9% in the week to $2.34 per gallon while
heating oil futures increased by 11% to $2.96 per gallon.
Ukraine launched drone attacks against two oil refineries in
southern Russia on Friday, resulting in a fire at the Ilsky
refinery. The Afipsky refinery, also in Krasnodar Krai, which
borders Crimea on the Black Sea and Azov Sea coast, was the other
facility in the attack.
Russia has been exporting more crude in February than planned under
an OPEC+ deal, following a combination of drone attacks and
technical outages at its refineries.
"Proof still needs to be provided that Russia is able to cut oil
exports sufficiently even without weather-related constraints,"
Carsten Fritsch, an analyst at Commerzbank, said on Friday in
reference to the country's OPEC+ cut quota.
On Thursday, the U.S. Treasury Department sanctioned another three
entities based in the United Arab Emirates (UAE) and one tanker
registered by Liberia for violating a cap placed on the price of
Russian oil by a coalition of Western nations.
(Additional reporting by Robert Harvey Ahmad Ghaddar in London and
Florence Tan in Singapore; Editing by Susan Fenton and Paul Simao)
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