Investing.com — Oil prices soared Friday, on track for a third straight week of gains, as cold weather in the U.S. and Europe raised demand hopes, while traders focused on possible supply disruptions resulting of further sanctions against Russia.
At 09:15 ET (14:15 GMT), March maturing futures rose 4% to $79.95 per barrel, while West Texas Intermediate crude futures rose 4.2% to $77.00 per barrel.
Cold weather is sweeping across the US and Europe
An ongoing polar vortex brought cold weather to several regions of the US and Europe, with snowstorms sweeping across the central US
This raised expectations that demand for heating fuels will increase in the regions and play a role in higher crude oil demand.
But cold weather is also expected to disrupt travel in the Northern Hemisphere. Recent data showed a series of sharp increases in U.S. oil product inventories, suggesting demand from the world’s largest fuel consumer remained weak.
Markets were also looking for more signals of stimulus in China as recent inflation data showed little improvement in the economy. The Lunar New Year holiday in February is also expected to drive increased travel demand in the country.
More sanctions against Russia – Reuters
The sentiment was also reinforced by a Reuters report citing a document that the United States will impose some of the toughest sanctions yet on Russia’s oil industry, affecting 180 ships, dozens of traders, two major oil companies and a number of Russia’s top oil companies will be designated. executives.
The document, purportedly from the US Treasury Department, was distributed to traders in Europe and Asia. Reuters could not verify the veracity of the document.
Citu increases the average Brent price
Citi Group (NYSE:) has revised higher Brent prices for the first quarter of 2025, citing potentially greater geopolitical implications for Iranian oil exports and cold weather boosting heating demand and hitting US oil supply.
“With prices potentially firmer until the Trump administration takes office, we revise average Brent prices from $65/bbl to $71/bbl for 1Q25 as Chinese buyers have pulled back more than expected on buying Iranian oil ,” said Citi.
A strong dollar limits oil’s upside potential
These gains came despite sharp gains this week, as aggressive signals from the Federal Reserve had traders bracing for a slower pace of rate cuts in 2025.
In addition, the US economy unexpectedly created more jobs in December than in the previous month. Last month, the number of jobs rose by 256,000, after being revised downwards to 212,000 in November. Economists had predicted an increase of 164,000 jobs.
Fed policymakers also expressed some caution about the protectionist and expansionary policies under newly-elected President Donald Trump, which could support inflation in the long term.
A strong dollar puts pressure on crude oil demand by making oil more expensive for international buyers.
(Ambar Warrick contributed to this article.)
