Oil prices headed for weekly loss, but stay well above $100/bbl

Representative image (Source: Reuters)

Oil prices were set for a second straight weekly loss, but found a floor above $100 a barrel on Friday after volatile trading this week with no easy replacement for Russian barrels in sight in a market already marked by tight supply.

Brent crude futures fell 29 cents, or 0.3%, to $106.35 a barrel by 1245 GMT, after surging nearly 9% on Thursday in the largest percentage gain since mid-2020.

U.S. West Texas Intermediate (WTI) crude futures were up 8 cents, or 0.1%, at $103.06 a barrel, adding to an 8% jump on Thursday.

Both benchmark contracts were set to end the week down more than 5%, after having traded in a $16 range. Prices hit 14-year highs nearly two weeks ago, encouraging bouts of profit taking since then.

The supply crunch from traders avoiding Russian barrels, stuttering nuclear talks with Iran, dwindling oil stockpiles and worries about a surge of COVID-19 cases in China hitting demand have combined to produce a rollercoaster ride for crude prices.

The volatility has scared players out of the oil market, which in turn is likely to exacerbate price swings.

Russia said an agreement had yet to be reached after a fourth day of talks with Ukraine during which some signs of progress had emerged earlier in the week.

"President Putin appears unwilling to end hostilities. This should ensure that the energy complex remains well supported with plenty of scope for further volatility," PVM oil market analyst Stephen Brennock said.

He also said rising U.S. interest rates pointed to a stronger U.S. economy, which could underpin oil demand, after the Federal Reserve on Wednesday raised interest rates for the first time since 2018 and laid out an aggressive plan to push borrowing costs to restrictive levels next year.

Meanwhile, output from the OPEC+ producer group in February undershot targets even more than in the previous month, sources said, while the International Energy Agency said oil markets could lose three million bpd of Russian oil from April.

Consultancy FGE said on-land product stocks at key countries are 39.9 million barrels lower for this time of the year relative to the 2017-2019 average.