Crude Oil Gains Amid Geopolitical Tensions, Natural Gas Dips on Profit-Taking

Petroleum Price

• Crude oil futures soared while natural gas prices tanked to finish the trading week. Oil prices have found support on geopolitical tensions in Eastern Europe, but natural gas tanked on profit-taking. Energy commodities continue to be volatile heading into 2025.
• January West Texas Intermediate (WTI) crude oil futures surged $1.09, or 1.55%, to $71.19 a barrel on Friday on the New York Mercantile Exchange. The US benchmark was able to register a 6.3% weekly gain, effectively erasing its year-to-date decline.
• Brent, the international benchmark for oil prices, firmed above $74 to close out the raucous trading week. January Brent crude futures rose $0.10, or 0.13%, to $74.73 a barrel on London’s ICE Futures exchange. Brent also notched a 5% weekly boost but is still down 3% this year.

Petroleum Demand and Supply

• Crude oil surged 6.46% last week, driven by escalating Russia-Ukraine tensions and a rebound in Chinese demand.
• Traders eye $71.53 resistance after last week’s gains. A breakout could push crude prices toward the key $74.42 level.
• Russia-Ukraine tensions stoke fears of oil supply disruptions, elevating geopolitical risks for the energy market.
• China’s policies to boost energy imports signal rising crude demand, offsetting bearish global economic concerns.
• OPEC+ supply signals and geopolitical developments could shape next week’s crude price outlook amid key resistance tests.

Petroleum News

• To address challenges in accessing foreign currency, FG in July said it would sell crude priced in naira to local refineries for an initial six months starting in October.

• Nigeria officially commenced the sale of crude oil to refineries in naira on October 1, forcing Dangote refinery to focus on local supply.

• The refinery received four cargoes of crude oil from the NNPC under the naira-for-crude sale agreement recently, but it still looks to the US for crude.

• “We need 650,000 barrels per day, (state oil firm NNPC Ltd) agreed to give a minimum of 385,000 bpd but they are not even delivering that,” said Edwin Devakumar, head of the Dangote refinery told Reuters on Friday.

• Dangote Refinery built in Lagos aims to compete with European refiners when operating at full capacity, however, it has struggled to secure sufficient crude supplies to run optimally.

• While Devakumar declined to give specific figures, he described deliveries from NNPC under the scheme as “peanuts”.

• Still, Dangote is the only one of eight operational refineries in Nigeria to have benefited from the naira-denominated crude sale arrangement, said Mathins Obaze, an acting executive director of the Crude Oil Refinery-owners Association of Nigeria (CORAN), a trade group of refiners.

Expert Opinion

Analysts attributed the uptick to escalating geopolitical tensions, including the intensifying Ukraine war and Russian President Vladimir Putin's warnings of a potential global conflict. The market is also pricing in the risk of sanctions or accidental damage to infrastructure, especially with Ukraine’s earlier drone strikes on Russian oil refineries. Beyond Europe, Iran’s advancing nuclear program continues to stoke concerns over tighter global supply if new sanctions emerge.