Futures Movers: Oil ends at 2-week high, with U.S. prices up 4% on week

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Markets/commodities reporter

Oil prices settled at a two-week high Friday, with the U.S. benchmark up more than 4% for the week—the largest such gain in a month.

Futures got a boost from a mix of factors, including bullish Chinese data and geopolitical risks from oil-rich regions in the Middle East, particularly in the wake of President Donald Trump’s refusal to certify Iran’s compliance with the nuclear deal.

“Trump put the Iran deal back in Congress’s hands,” said Phil Flynn, senior market analyst at Price Futures Group. But “by kicking the can to Congress, fear of an immediate response from Iran or more sanctions on their oil were reduced” for now.

Oil had briefly trimmed gains after a report that Saudi Arabia may shelve their Saudi Aramco IPO, he said. The Financial Times reported that Saudi Aramco may instead opt for a private share sale.

“Some feared that they may not have the same incentive to raise oil prices because of it but, really, if they have to go private with the share sale, they will still need high oil prices to get a good price,” said Flynn.

November West Texas Intermediate crude CLX7, +1.52% the U.S. price gauge, rose 85 cents, or 1.7%, to settle at $51.45 a barrel on the New York Mercantile Exchange. For the week, it was up around 4.4%. December Brent crude LCOZ7, +1.58% the global benchmark, rose 92 cents, or 1.6%, to $57.17 a barrel on ICE Futures Europe—around 2.8% higher on the week.

Both WTI and Brent marked the highest settlements since Sept. 29 and their strongest weekly percentage gains since the week ended Sept. 15, according to FactSet data.

In a speech Friday, Trump refused to certify Iran’s compliance with a 2015 international agreement to curb the Islamic Republic’s nuclear program in exchange for economic sanctions relief. The lifting of sanctions at the start of 2016 has allowed Iran to significantly increase its production to around 3.8 million barrels a day. Trump, however, has announced plans for a new strategy in dealing with Iran that include new sanctions on the country.

The moves could undermine Iran’s export capacity, but not likely in the near term, analysts said.

Read Trump Today: President punts Iran deal to Congress

At the same time, tensions are building between Iraq’s central government in Baghdad and the leaders of the semiautonomous Kurdistan region in the north, which late in September held an independence referendum. Crude exports out of the region total over 500,000 barrels a day.

Meanwhile, Chinese crude imports rose by roughly 1 million barrels a day in September, on the month, to 9 million barrels a day, according to government data released Friday.

The data could mean that “either the Chinese economy is more resilient than we thought” or “China thinks the oil price has seen its bottom and is stepping up its oil purchases,” said Nico Pantelis, head of research at Secular Investor.

The spike in prices Friday followed two closely watched reports this week from the Organization of the Petroleum Exporting Countries and the International Energy Agency.

OPEC said its crude-oil production had increased by nearly 90,000 barrels a day in September, while raising its forecast for global demand for this year and next. Meanwhile, the IEA praised OPEC’s efforts to rein in output and said global supply had risen in September due to increased U.S. production.

On Friday, however, Baker Hughes BHGE, -0.53%  reported that the number of active U.S. rigs drilling for oil fell for a second week in a row—by 5 to 743 this week.

Data released Thursday by the U.S. Energy Information Administration showed a larger-than-expected decline in last week’s domestic crude-oil supplies, their third-consecutive weekly fall.

Back on Nymex, November gasoline added 2.5%, to $1.622 a gallon, for a weekly rise of around 4.1%, while November heating oil rose 1.8% to $1.797 a gallon, settling up 3% for the week.

November natural gas NGX17, +0.07%  rose 0.4% to $3 per million British thermal units—its highest since Sept. 29—for a weekly rise of 4.8%.

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