Oil prices fall but post the fourth straight weekly gain

Oil prices fell on Friday, posting a fourth straight weekly gain on concerns that recent U.S. sanctions on Russian energy trade will further exacerbate oil supply disruptions after Trump takes office.

Brent crude futures fell 50 cents, or 0.6%, to $80.79 a barrel but gained 1.3% for the week. WTI crude futures fell 80 cents, or 1%, to $77.88 a barrel after rising 1.7% for the week.

Sanctions with Russia are causing supply crunches in Europe, India, and China.

The Biden administration announced broader sanctions last week targeting Russian oil producers and tankers.

Investors are also weighing the potential impact of President-elect Donald Trump’s return to the White House on Monday. Tougher sanctions on Russian oil are likely.

Money managers increased their net long U.S. crude oil trading and options positions in the week to Jan. 14, according to data released by the U.S. Commodity Futures Trading Commission on Friday.

Speculators increased their futures and options positions in New York and London by 8,038 contracts during the period, to 215,193.

Also weighing on oil prices was the expectation that attacks by Yemen’s Houthi militia on ships in the Red Sea would cease after the Gaza ceasefire agreement.

The Houthi attacks have disrupted global shipping and forced ships to make longer, more expensive journeys around southern Africa for more than a year.

On the demand side, expectations of rising demand have provided some support for the oil market. Data this week showed that inflation in the world’s largest economy has eased, raising expectations for an interest rate cut in the USA.

Traders are also weighing new data from China, the world’s largest oil importer. Chinese economy met the government’s 5% growth target last year. But China’s oil refinery output in 2024 fell for the first time in more than two decades, excluding the pandemic year of 2022, according to government data, as plants scaled back operations in response to stagnant fuel demand and lower margins.

The U.S. oil rig count, a gauge of future production, fell two this week to 478, according to Baker Hughes.

A frigid Arctic airwave is expected to blanket much of the U.S. starting Friday and into next week, boosting demand for heating fuel, and likely affecting some manufacturing operations.

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