Quick overview

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Crude oil rose and ended the week on a positive note as investors assessed uncertain prospects for a ceasefire in Ukraine and as the commodity crossed a key technical level.

West Texas Intermediate rose 0.7 percent to close above $60 per barrel, suggesting a risk premium persists. Russia objected to some parts of a plan supported by the US because a peace deal between Russia and Ukraine remains elusive.

The market is watching developments on a settlement that could lower prices by easing sanctions and increasing Russian oil flows, especially as an expected oversupply begins to appear.

Ukraine claimed responsibility for an overnight attack on the Temryuk seaport and Russia’s Syzran refinery. Meanwhile, reports indicate that Washington lobbied European nations to block a plan to use Moscow’s frozen assets to support a large loan for Ukraine. On Friday, WTI settled above its 50-day moving average, a crucial support level for the commodity, boosting bullish momentum.

Algorithmic traders covering some of their bearish positions in recent sessions also helped push prices higher, and analysts forecast more buying activity in the coming weeks. According to Dan Ghali, a commodity strategist at TD Securities, “this session should be the first significant 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.”

Worldwide oversupply is exerting downward pressure on prices amid geopolitical risks. While Canadian oil prices have fallen sharply, Saudi Aramco will cut the price of its flagship Arab Light crude grade to the lowest level since 2021 for January. Additionally, Baker Hughes reports that the number of US crude oil rigs increased by six over the previous week.