Russia-Ukraine de-escalation could push oil prices to $50/bbl, Citi says

[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 ticked higher Friday but posted a third consecutive weekly loss as increased oversupply concerns and further tariff sparring between the U.S. and China sent prices to their lowest in five months.

Prices steadied to end the week after President Trump said he plans to meet with China’s President Xi, likely in two weeks in South Korea, and said his proposed 100% tariff on goods from China was "not sustainable," a notably softer tone that helped turn around Wall Street's early losses Friday.

However, Trump's planned meeting with Russia's President Putin has prompted speculation that a potential easing of sanctions on Russian oil could add to global supply.

A de-escalation of the war in Ukraine could push oil prices toward $50/bbl, Citi senior commodities strategist Eric Lee said in a Bloomberg interview, as a reduced danger of Ukrainian attacks on Russia's refinery network and a relaxation of diplomatic pressure on would-be buyers of Russian crude would "precipitate a faster move" toward the bank's bear-case scenario.

Lee noted that a ~$10/bbl drop would pose a threat to the U.S. shale industry, which requires higher prices than some state-controlled explorers to support drilling activity.

A decline also would raise the issue of whether OPEC+ and de-facto leader Saudi Arabia would revert to defending prices or align with the Trump administration's preference for cheaper oil, Lee added.

Concerns about global oversupply already were strong, and were reinforced earlier this week [https://seekingalpha.com/news/4504110-oil-slides-to-five-month-low-as-unusually-bearish-iea-report-forecasts-bigger-surplus] by the International Energy Agency's reduced demand forecast and increased expectations for a surplus for 2026.

This week, front-month Nymex crude (CL1:COM [https://seekingalpha.com/symbol/CL1:COM]) for November delivery finished -2.3% to $57.54/bbl and front-month Brent crude (CO1:COM [https://seekingalpha.com/symbol/CO1:COM]) for December delivery also closed -2.3% to $61.29/bbl; on Friday, WTI and Brent crude gained 0.1% and 0.4%, respectively, snapping a three-day losing streak.

Front-month Nymex November natural gas (NG1:COM [https://seekingalpha.com/symbol/NG1:COM]) settled -3.1% on the week to $3.008/MMBtu, after rising 2.4% on Friday.

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 +0.9%.

Top 20 gainers in energy and natural resources in the past 5 days: Fluence Energy (FLNC [https://seekingalpha.com/symbol/FLNC]) +40%, Critical Metals (CRML [https://seekingalpha.com/symbol/CRML]) +39.2%, Stardust Power (SDST [https://seekingalpha.com/symbol/SDST]) +37.9%, Electra Battery Materials (ELBM [https://seekingalpha.com/symbol/ELBM]) +34.5%, Bloom Energy (BE [https://seekingalpha.com/symbol/BE]) +28.3%, Liberty Energy (LBRT [https://seekingalpha.com/symbol/LBRT]) +27.1%, ESS Tech (GWH [https://seekingalpha.com/symbol/GWH]) +26.9%, Green Plains (GPRE [https://seekingalpha.com/symbol/GPRE]) +23%, Korea Electric Power (KEP [https://seekingalpha.com/symbol/KEP]) +22.4%, FTC Solar (FTCI [https://seekingalpha.com/symbol/FTCI]) +19.4%, China Natural Resources (CHNR [https://seekingalpha.com/symbol/CHNR]) +19.3%, T1 Energy (TI) +18.7%, Verde Clean Fuels (VGAS [https://seekingalpha.com/symbol/VGAS]) +14.7%, Solaris Energy Infrastructure (SEI [https://seekingalpha.com/symbol/SEI]) +14.2%, Foremost Clean Energy (FMST [https://seekingalpha.com/symbol/FMST]) +14%, Stem (STEM [https://seekingalpha.com/symbol/STEM]) +13.6%, Shoals Technologies (SHLS [https://seekingalpha.com/symbol/SHLS]) +13.6%, Advanced Energy (AEIS [https://seekingalpha.com/symbol/AEIS]) +13.2%, Daqo New Energy (DQ [https://seekingalpha.com/symbol/DQ]) +12.9%, Central Puerto (CEPU [https://seekingalpha.com/symbol/CEPU]) +12.8%.

Top 10 decliners in energy and natural resources in the past 5 days: Sable Offshore (SOC [https://seekingalpha.com/symbol/SOC]) -35.8%, American Battery Technology (ABAT [https://seekingalpha.com/symbol/ABAT]) -28.1%, NioCorp Developments (NB [https://seekingalpha.com/symbol/NB]) -21.9%, Martin Midstream Partners (MMLP [https://seekingalpha.com/symbol/MMLP]) -18%, IsoEnergy (ISOU [https://seekingalpha.com/symbol/ISOU]) -17.5%, USA Rare Earth (USAR [https://seekingalpha.com/symbol/USAR]) -14.9%, Gran Tierra Energy (GTE [https://seekingalpha.com/symbol/GTE]) -11%, Geospace Technologies (GEOS [https://seekingalpha.com/symbol/GEOS]) -10.7%, Amplify Energy (AMPY [https://seekingalpha.com/symbol/AMPY]) -10.6%, Ramaco Resources (METCB [https://seekingalpha.com/symbol/METCB]) -10.6%.

Source: Barchart.com

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