Oil set for second weekly gain amid Russia’s warning

Bloomberg

Oil rises, heading for second weekly gain, as Russia said it may cut crude production in response to the price cap imposed by the Group of Seven on its exports, highlighting risks to global supplies in the New Year.
West Texas Intermediate climbed to $79 a barrel, putting it on course for a gain of about 6% for the week. Russia may reduce output by 500,000 to 700,000 barrels a day in response to the cap, Deputy Prime Minister Alexander Novak said, according to the state-run Tass news service.
Oil has rebounded since hitting a one-year low earlier this month. As the war in Ukraine grinds on, traders have been waiting for Moscow’s full response to the cap, a policy that imposed a $60-a-barrel ceiling on Russian crude in a bid to reduce the Kremlin’s income while keeping exports on the market. President Vladimir Putin said that he would sign a decree on the nation’s reaction to the threshold on Monday or Tuesday, containing unspecified “preventive measures”.
“A risk-on sentiment and a weaker US dollar are helping oil today,” said Giovanni Staunovo, a commodities
analyst at UBS Group AG.
“The Russian comments are also helping but the market probably wants to see it before it believes, hence a muted response.”
There have been early signs the cap is impeding Russian oil flows, an impact that would run counter to its stated aims. In the first full week after the limit came into effect on December 5 — in tandem with a European Union ban on seaborne Russian imports and curbs on insurance — total volumes shipped from the nation sank by 54%, tanker tracking compiled by Bloomberg showed.
In the US, data this week showed a drop in commercial crude inventories, with nationwide holdings at their lowest for this time of year since 2014. Traders are also watching for any fallout for energy markets from a vicious winter storm that’s pummeling parts of the country.
The prompt time spread in WTI futures was 12 cents a barrel in backwardation, a bullish pattern in which near-term prices are higher than later-dated ones. A week ago, it was 17 cents a barrel in an opposite bearish contango.