DTN Oil Update
Oil Drops 4% on Week as Russian Sanctions Deadline Hits
SECAUCUS, N.J. (DTN) -- Crude oil futures settled down almost 4% at the close of the week on Friday, Nov. 21, as concerns about growing global oversupply intensified when U.S. sanctions against Russian companies Rosneft and Lukoil took effect today. The bearish sentiment was due to expectations that millions of barrels of Russian oil could be stranded at sea.
Crude buyers and transporters had been given until Nov. 21 by the U.S. Department of the Treasury to end trade relationships with Rosneft and Lukoil, otherwise they would face sanctions as well. The Trump administration is attempting to bring an end to the Russia-Ukraine war by depriving the Kremlin of critically needed oil money.
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Approximately 48 million bbl of Russian Urals and ESPO crudes from Rosneft and Lukoil were currently on water or in the process of being loaded, according to a Bloomberg report.
The Russian supply at sea adds to recent forecasts from the International Energy Agency and the Organization of the Petroleum Exporting Countries indicating that the market was in a glut as of the third quarter.
"Indian refiners stopped buying Russian crude and China has also slowed purchases. Yet before we say bingo, petroleum prices are assessing the potential likelihood of a U.S.-brokered peace deal between Russia and Ukraine," Phil Flynn, analyst at Chicago's Price Futures Group, said in a commentary.
Media reports stating that the U.S. government has also urged Ukraine to make territorial concessions, as part of a potential deal to end the war with Russia, helped limit some of the pressure on crude prices on Friday.
The NYMEX WTI crude futures contract for January delivery settled down $0.94, or 1.6%, at $58.06 bbl. January ICE Brent futures contract fell $0.90, or 1.5%, to $62.48 bbl. WTI and Brent crude benchmarks lost 3.6% and 3%, respectively, on week.
The December RBOB gasoline futures contract closed down $0.035 at $1.8834 gallon. Front-month ULSD futures dropped $0.0769 to $2.4564 gallon.
The U.S. Dollar Index rose 0.045 points to 100.135 against a basket of foreign currencies.