Oil rebounds 1% to end week steady amid prospect of Ukraine ceasefire

By Nicole Jao

NEW YORK (Reuters) -Oil prices rebounded by 1% on Friday to end the week nearly unchanged as investors weighed the diminishing prospects of a quick end to the Ukraine war that could bring back more Russian energy supplies to Western markets. 

Brent crude futures settled 70 cents, or 1%, higher at $70.58 a barrel, after falling 1.5% in the previous session. U.S. West Texas Intermediate crude (WTI) <CLc1> closed at $67.18 a barrel, up 63 cents, or 1%, after losing 1.7% on Thursday.

Both benchmarks ended the week little changed from last Friday, when Brent settled at $70.36 and WTI at $67.04.

"Brent oil has hovered around the $70 mark for the past two weeks. Whether it will remain at this level in the coming week depends on the political news situation," Commerzbank analysts said in a note.

Russian President Vladimir Putin said on Thursday that Moscow supported a U.S. proposal for a ceasefire in Ukraine in principle, but sought a number of clarifications and conditions that appeared to rule out a quick end to the fighting.

"If the prospect for a ceasefire continues to be pushed into the future, the market would expect Russian oil to be under sanctions for an extended period of time," said Andrew Lipow, president of Houston-based Lipow Oil Associates.

On Friday, Trump again urged Russia to agree to a ceasefire proposal, saying on his private social media platform that he would extract the U.S. from what he called a "real 'mess' with Russia".

The Trump administration had said a licence allowing energy transactions with Russian financial institutions expired this week. Chinese state firms are also curbing Russian oil imports on sanctions risks, sources told Reuters.

China and Russia stood by Iran after the U.S. demanded nuclear talks with Tehran, with senior Chinese and Russian diplomats saying dialogue should only resume based on "mutual respect" and all sanctions ought to be lifted.    

"Most price projections were to the downside in the short term, but geopolitical tension could still cause supply disruptions," ANZ analysts said in a note to clients.

The International Energy Agency warned on Thursday that global oil supply could exceed demand by around 600,000 barrels per day this year, due to growth led by the U.S. and weaker-than-expected global demand.

Unstable macroeconomic conditions caused by escalating trade tensions between the U.S. and other nations prompted the IEA to cut its demand growth estimates for the last quarter of 2024 and the first quarter of this year.

"High risks on the demand side and increasing supply from OPEC+ argue against a sustained recovery in oil prices," Commerzbank analysts said.

In the U.S., the number of oil rigs edged up by one this week, services company Baker Hughes said.  

(Reporting by Nicole Jao in New York, Robert Harvey in London, Florence Tan in Singapore; Editing by Mark Potter, Nia Williams and Marguerita Choy)