Oil rises as Ukraine ceasefire looks far away; stronger sanctions against Russia back in focus

[Data analyzing in commodities energy market: the charts and quotes on display. US WTI crude oil price analysis. Stunning price drop for the last 20 years.]
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Crude oil futures edged higher Friday and posted weekly gains for the first time in three weeks, with little sign of progress toward a peace deal to end the war in Ukraine and raising the potential for eventual stronger sanctions against Russia.

Russia launched an air attack Thursday near Ukraine's border with the European Union, and Ukrainian drone and missile attacks disabled parts of the giant Druzhba pipeline - the world's largest oil conduit - which carries crude from southeast Russia to Germany, Hungary and Slovakia.

Eastern Germany, including Berlin, depend heavily on Kazakh crude imports that transit Druzhba, while Hungary and Slovakia are fully dependent on the pipeline for their energy needs.

"Trying to get a peace deal between Russia and Ukraine is very complicated and the market isn't as sure as they were only last week," Phil Flynn of the Price Futures Group said in a note. "Oil seems to be locked in a geopolitical trading range as U.S. inventories are tight and the crack spreads for heating oil and gasoline stay solid."

Market attention also is weighing the possibility that President Trump may carry out his threats of secondary tariffs on India for buying Russian oil, which could take effect on Wednesday, and analysts say the threats do not appear to be deterring Indian refineries, which may be increasingly sourcing Russian oil again.

Crude futures showed little reaction to Federal Reserve Chair Powell's comments at Jackson Hole that raised hopes for a September interest rate cut, which caused stocks to rise and the dollar to fall.

"A Fed cut should be more bullish to crude but there's still a more wait-and-see attitude to see how the negotiations with Russia are going to go," according to Dennis Kissler of BOK Financial, adding that the market's main focus is on whether the U.S. moves forward with secondary tariffs on India for buying Russian oil.

Oil's gains are being limited by continued expectations that global markets will face a supply glut after U.S. peak summer demand ends and that U.S. tariffs will hurt economic growth just as OPEC+ returns idled production to the market.

This week, front-month Nymex crude (CL1:COM [https://seekingalpha.com/symbol/CL1:COM]) for October delivery closed +2.7% to $63.66/bbl, and front-month October Brent crude (CO1:COM [https://seekingalpha.com/symbol/CO1:COM]) ended +2.8% to $67.73/bbl, the highest settlement since August 14 and August 4, respectively; on Friday, WTI settled up 0.2% and Brent gained 0.1%.

U.S. natural gas futures extended their decline to five consecutive weeks as weather forecasts continue to cool down and the low-demand shoulder season approaches; the front-month Nymex (NG1:COM [https://seekingalpha.com/symbol/NG1:COM]) September contract gas settled -7.5% for the week and 4.5% on Friday at $2.698/MMBtu, its lowest close since November 8, 2024.

ETFs: (NYSEARCA:USO [https://seekingalpha.com/symbol/USO]), (BNO [https://seekingalpha.com/symbol/BNO]), (NYSEARCA:UCO [https://seekingalpha.com/symbol/UCO]), (SCO [https://seekingalpha.com/symbol/SCO]), (USL [https://seekingalpha.com/symbol/USL]), (DBO [https://seekingalpha.com/symbol/DBO]), (DRIP [https://seekingalpha.com/symbol/DRIP]), (GUSH [https://seekingalpha.com/symbol/GUSH]), (USOI [https://seekingalpha.com/symbol/USOI]), (UNG [https://seekingalpha.com/symbol/UNG]), (BOIL [https://seekingalpha.com/symbol/BOIL]), (KOLD [https://seekingalpha.com/symbol/KOLD]), (UNL [https://seekingalpha.com/symbol/UNL]), (FCG [https://seekingalpha.com/symbol/FCG]), (NYSEARCA:XLE [https://seekingalpha.com/symbol/XLE])

Energy stocks, as represented by the Energy Select Sector SPDR Fund (NYSEARCA:XLE [https://seekingalpha.com/symbol/XLE]), finished the week +3%.

Top 10 gainers in energy and natural resources in the past 5 days: Energy Focus (EFOI [https://seekingalpha.com/symbol/EFOI]) +29.8%, Shoals Technologies (SHLS [https://seekingalpha.com/symbol/SHLS]) +24.8%, National Energy Services (NESR [https://seekingalpha.com/symbol/NESR]) +24.3%, Foremost Clean Energy (FMST [https://seekingalpha.com/symbol/FMST]) +19.3%, Array Technologies (ARRY [https://seekingalpha.com/symbol/ARRY]) +19%, Bor Drilling (BORR [https://seekingalpha.com/symbol/BORR]) +17.7%, Calumet (CLMT [https://seekingalpha.com/symbol/CLMT]) +17.3%, Sunrun (RUN [https://seekingalpha.com/symbol/RUN]) +16.4%, New Fortress Energy (NFE [https://seekingalpha.com/symbol/NFE]) +14.5%, FTC Solar (FTCI [https://seekingalpha.com/symbol/FTCI]) +14.3%.

Top 5 decliners in energy and natural resources in the past 5 days: 5E Advanced Materials (FEAM [https://seekingalpha.com/symbol/FEAM]) -26.2%, enCore Energy (EU [https://seekingalpha.com/symbol/EU]) -13.5%, Empresa Distribuidora y Comercializadora (EDN [https://seekingalpha.com/symbol/EDN]) -13.1%, Nano Nuclear Energy (NNE [https://seekingalpha.com/symbol/NNE]) -12.7%, CanadianSolar (CSIQ [https://seekingalpha.com/symbol/CSIQ]) -11.8%.

Source: Barchart.com

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