Oil rally slows as market turns skeptical on Trump's sanctions commitment

[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 lower Friday as doubts crept into the market about the effectiveness of the Trump administration's sanctions on Russia's two biggest oil companies.

Traders are weighing the potential knock-on impact on Russian oil supply and oil trade flows from U.S. sanctions on Rosneft and Lukoil, and any lasting impact on the oil market will depend on how long sanctions remain in place and how effectively they are enforced.

The sanctions prompted Chinese state oil majors to suspend Russian oil purchases in the short term, and refiners in India - the largest buyer of seaborne Russian oil - are set to sharply cut Russian crude imports, Reuters reported, citing industry sources.

The sanctions were President Trump's first significant measures taken against Russia in its war on Ukraine, but "it remains to be seen how seriously the Trump administration will enforce the measures," according to Maria Shagina at the International Institute for Strategic Studies in Berlin, noting the announcement postpones enactment of the sanctions for a month, until November 21.

"More importantly, it remains to be seen whether the U.S. Treasury will take an extraterritorial approach and target Chinese and Indian entities, including financial institutions, with secondary sanctions," Shagina wrote.

Oil's surge "has about played out," Ritterbusch said in a note, adding that uncertainty is rising about enforcement of the sanctions, possible workarounds, and the extent to which India and China will curb purchases of Russian oil.

Experience shows previous sanctions to have been less effective than initially expected due to Russia's efficient sanctions evasion strategies, Olivia Cross of Capital Economics wrote. "After all, Russian seaborne crude exports were resilient following the imposition of U.S. sanctions in January."

Kuwait's oil minister said OPEC would be prepared to offset any shortage in the market by raising production.

This week, front-month Nymex crude (CL1:COM [https://seekingalpha.com/symbol/CL1:COM]) for December delivery finished +7.6% to $61.50/bbl, and front-month Brent December crude (CO1:COM [https://seekingalpha.com/symbol/CO1:COM]) also closed +7.6% to $65.94/bbl, snapping three-week losing streaks for both benchmarks; on Friday, WTI and Brent settled down 0.5% and 0.1%, respectively.

U.S. natural gas futures racked up their first weekly gain in a month thanks to a cooler shift in the weather outlook for the end of October and beginning of November, which sparked a short-covering rally; front-month Nymex November natgas (NG1:COM [https://seekingalpha.com/symbol/NG1:COM]) settled +9.8% on the week and down 1.2% on Friday at $3.304/MMBtu.

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 +2.4%.

Top 20 gainers in energy and natural resources in the past 5 days: Core Laboratories (CLB [https://seekingalpha.com/symbol/CLB]) +48.7%, OMS Energy technologies (OMSE [https://seekingalpha.com/symbol/OMSE]) +42.8%, Dawson Geophysical (DWSN [https://seekingalpha.com/symbol/DWSN]) +34.7%, New Era Energy & Digital (NUAI [https://seekingalpha.com/symbol/NUAI]) +28.8%, Geospace Technologies (GEOS [https://seekingalpha.com/symbol/GEOS]) +28.2%, SunPower (SPWR [https://seekingalpha.com/symbol/SPWR]) +25.6%, American Battery Technology (ABAT [https://seekingalpha.com/symbol/ABAT]) +23.3%, Patterson-UTI Energy (PTEN [https://seekingalpha.com/symbol/PTEN]) +20.3%, Prairie Operating (PROP [https://seekingalpha.com/symbol/PROP]) +19.9%, Sasol (SSL [https://seekingalpha.com/symbol/SSL]) +19.7%, Transocean (RIG [https://seekingalpha.com/symbol/RIG]) +19.6%, Halliburton (HAL [https://seekingalpha.com/symbol/HAL]) +19.2%, Nabors Industries (NBR [https://seekingalpha.com/symbol/NBR]) +18.7%, ProFrac Holding (ACDC [https://seekingalpha.com/symbol/ACDC]) +18.1%, Marine Petroleum (MARPS [https://seekingalpha.com/symbol/MARPS]) +17.9%, PBF Energy (PBF [https://seekingalpha.com/symbol/PBF]) +17.7%, Valaris (VAL [https://seekingalpha.com/symbol/VAL]) +17.3%, National Energy Services Reunited (NESR [https://seekingalpha.com/symbol/NESR]) +16.7%, Borr Drilling (BORR [https://seekingalpha.com/symbol/BORR]) +16.7%, Imperial Petroleum (IMPP [https://seekingalpha.com/symbol/IMPP]) +15.9%.

Top 10 decliners in energy and natural resources in the past 5 days: Critical Metals (CRML [https://seekingalpha.com/symbol/CRML]) -27.9%, Ramaco Resources (METC [https://seekingalpha.com/symbol/METC]) -23.8%, T1 Energy (TE [https://seekingalpha.com/symbol/TE]) -19.7%, Oklo (OKLO [https://seekingalpha.com/symbol/OKLO]) -16.7%, USA Rare Earth (USAR [https://seekingalpha.com/symbol/USAR]) -15%, Nuscale Power (SMR [https://seekingalpha.com/symbol/SMR]) -14.7%, ESS Tech (GWH [https://seekingalpha.com/symbol/GWH]) -14.6%, Nouveau Monde Graphite (NMG [https://seekingalpha.com/symbol/NMG]) -13.5%, Plug Power (PLUG [https://seekingalpha.com/symbol/PLUG]) -13.2%, TMC the metals company (TMC [https://seekingalpha.com/symbol/TMC]) -12.9%.

Source: Barchart.com

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