Crude oil futures weekly recap, July 14 – July 18

WTI futures logged sizable gains this week, while Brent closed on par with last weeks price. A Malaysian airliner was shot down over Ukraine on Thursday, disturbing markets amid fresh sanctions against Russia. Meanwhile, an Israeli offensive in Gaza and US oil inventories draws also supported crude.

West Texas Intermediate futures for settlement in August closed for $102.97 per barrel on Friday on the New York Mercantile Exchange, down 0.06% for the day and some 2.2% up for the week. Weekly high and low stood at, respectively, $103.94 per barrel on Friday and $99.01 per barrel on Tuesday, which was also the lowest point in the last two months. Last week the US benchmark lost about 3%.

Meanwhile on the ICE in London, Brent futures due in August recorded a 0.60% daily drop to close for $107.24 per barrel on Friday, logging minor losses for the week. Brent’s premium to september WTI stood at $5.29, narrowing last week’s closing margin of $5.83. Weekly high and low were at, respectively, $108.62 per barrel on Friday and $105.59 per barrel on Tuesday, which was also the lowest price in three months. The European brand dropped about 3.4% last week.

“The geopolitical threat was discounted too quickly and has rapidly been priced back in,” John Kilduff, partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said for Bloomberg. “The events in eastern Ukraine and in the Middle East are a reminder of the fragility of the world’s biggest oil-exporting regions.”

Ukraine

A Malaysian airliner, Boeing 777, carrying 298 people, crashed over rebel-controlled territory in eastern Ukraine on Thursday, immediately spurring speculation that it was shot down. The plane was flying at cruise altitude of some 10 kilometers, and no distress signal was emitted.

The black boxes of the plane were said to be found by the rebels, who then declared that they would hand them over to Russian investigators. An international team of observers was first promised full access to the crashsite, but was eventually halted by the separatists, denying them propper access to the site.

US President Barack Obama said there was evidence, that the plance was shot down by a missile fired from rebel-held territory. He said that he would ensure “the truth is out”, and added that it was up to Russia to stop the flow of heavy armaments and fighters into Ukraine, the BBC reported.

Russian President Vladimir Putin dismissed any liability. “The country in whose airspace this happened bears responsibility for it,” he said.

Earlier, the Ukrainian military had said two of its own warplanes were shot down by the militants, one of which is said to have also been at relatively high altitude of 6-7 km. Authorities say the insurgents are now equipped with modern and powerful weaponry supplied by Russia.

The Kremlin has denied any involvement with the conflict and the separatists.

During the Crimean crisis, Russian President also denied Moscow’s involvement, only to later admit that it was Russian soldiers who took over the peninsula.

Sanctions

The US and EU stepped up sanctions against Russia this week, as Moscow’s efforts to deescalate tensions in Ukraine are seen as insufficient. In addition to expanding the list of individuals, the US also targeted Gazprombank, the Russian gas giant’s bank, Rosneft and the Kalashnikov concern, limiting their access to US capital markets.

“The Russian leadership will see once again that its actions in Ukraine have consequences,” US President Obama said. “Ukrainians deserve to forge their own destiny”.

The EU also added that the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) would stop financing projects in Russia. The EIB alone has provided more than €1.6 billion for Russian ventures since 2003.

Israel

After 10 days of airstrikes and naval bombardment, the Israeli ground forces have begun moving into the Gaza strip this week, fighting Hamas militants.

“Following 10 days of Hamas attacks by land, air and sea, and after repeated rejections of offers to de-escalate the situation, the IDF [Israel Defense Forces] has initiated a ground operation within the Gaza Strip,” the military said in a statement.

Since fighting escalated on July 8, nearly 2 000 attacks by the Israeli military have been carried out in the Gaza strip, while Hamas militants have fired more than 1 380 missiles aimed at Israel.

Meanwhile, the UN says at least 1 370 homes have been destroyed in Gaza and more than 18,000 people displaced in recent hostilities, while most of those killed in Gaza have been civilians.

US oil report

The US Energy Information Administration (EIA) posted its weekly oil inventories report for the seven day through July 11 today. The log revealed a 7.525 million-barrel for commercial crude oil inventories, while gasoline and distillates added 0.171 million and 2.528 million barrels, respectively.

“The large, seasonal draw in crude supplies shows demand picking up,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said for Bloomberg. “One hundred dollars is a good level of support and we should see a bit of a bounce.”

Next week

Next week will offer a plethora of economic data. The US will post the key reading on consumer inflation for June on Tuesday, as well as several figures on housing. Later in the week, durable goods orders for June will be posted, after further housing data and the preliminary manufacturing PMI for July.

Markit will report EUs services and manufacturing PMIs preliminary readings for July, while HSBC will post Chinas preliminary manufacturing PMI for July.