Oil futures settled higher, boosted by supply constraints and worries of a Russian attack on neighboring Ukraine, pushing prices toward their fourth weekly gain despite sources saying China is set to release crude reserves around the Lunar New Year.
Brent crude futures settled $1.59, or 1.9 percent, higher at a 2-1/2-month high of $86.06 a barrel, gaining 5.4 percent in the week.
US West Texas Intermediate crude gained $1.70, or 2.1 percent, to $83.82 per barrel, rising 6.3 percent in the week.
Both Brent and US futures entered overbought territory for the first time since late October.
“People looking at the big picture realize that global supply versus demand situation is very tight and that’s giving the market a solid boost,” said Phil Flynn, senior analyst at Price Futures Group.
Flynn added that traders did not want to be short in the market as tensions mounted between Russia and Ukraine and ahead of a long US weekend for the Martin Luther King Jr Day holiday, which typically sees lower trading volumes.
US officials voiced fears on Friday that Russia was preparing to attack Ukraine if diplomacy failed. Russia, which has massed 100,000 troops on Ukraine’s border, released pictures of its forces on the move.
“There has been a bump up in the geopolitical risk factor that is boosting prices,” said John Kilduff, a partner at Again Capital Management in New York.
The dollar appeared headed toward its largest weekly fall in four months. A weaker dollar makes commodities more affordable for holders of other currencies.
Several banks have forecast oil prices of $100 a barrel this year, with demand expected to outstrip supply, not least as capacity constraints among OPEC+ countries come into focus.
Libya’s National Oil Corp Chairman Mustafa Sanallah said oil prices were “expected to continue to rise unless the market fundamentals change and global investment … increases,” adding that oil output from the country totaled 1.045 million barrels per day.
