(Bloomberg) — Oil gained, finishing the week positive as investors assessed the murky outlook for a cease-fire in Ukraine and as the commodity pushed past an important technical level.
West Texas Intermediate rose 0.7% to settle above $60 a barrel, signaling that a risk premium persists as a peace deal between Russia and Ukraine remains elusive. Ukrainian negotiators continued talks with US officials in Florida for a second day, with Russia objecting to some of the points in a US-backed plan.
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The market is watching for progress on a settlement that could lower prices by potentially easing sanctions and boosting Russian oil flows just as an expected oversupply in the market starts to materialize.
But an agreement appears distant: Ukraine took credit for an overnight attack on Russia’s Syzran refinery and the Temryuk seaport. Meanwhile, Washington reportedly lobbied European countries in an effort to block a plan to use Moscow’s frozen assets to back a massive loan for Ukraine.
Adding to bullish momentum, WTI on Friday settled above its 50-day moving average, a key level of support for the commodity. Prices have also received a boost from algorithmic traders covering some of their bearish positions in recent sessions — and analysts say more buying could materialize in coming weeks.
“This session should mark the first notable short covering program since algo selling activity exhausted itself, and the bar is low for subsequent CTA buying activity to hit the tapes over the coming week,” said Dan Ghali, a commodity strategist at TD Securities.
Countering geopolitical risks, oversupply is putting downward pressure on prices globally. Saudi Aramco will reduce the price of its flagship Arab Light crude grade to the lowest level since 2021 for January, while Canadian oil has tumbled. And the number of crude oil rigs in the US rose by 6 over the past week, according to Baker Hughes.
–With assistance from John Deane, Grant Smith and Alex Longley.
(Corrects Brent price percentage change in price box.)
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