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Futures Movers: Oil scores a 6th straight weekly gain, with Brent logging a fresh 7-year high

Oil futures scored a sixth-consecutive weekly gain on Friday, with global benchmark prices settling at a fresh seven-year high, but U.S. prices ended below the day’s best levels.

Fears about a potential Russian invasion of Ukraine and tight crude supplies continue to provide support. “Geopolitical tensions are at the forefront ahead of the weekend, with fears of Russian invasion and ongoing turbulence in the Middle East,” Phillip Streible, chief market strategist at Blue Line Futures, told MarketWatch.

March Brent crude BRNH22, +0.37%, the global benchmark, climbed 69 cents, or 0.8%, to settle at $90.03 a barrel on ICE Futures Europe, managing to recover Thursday’s 62-cent loss and then some to log the highest finish since October 2014, according to Dow Jones Market Data. The front-month contract rose 2.4% for the week. April Brent BRN00, +0.21% BRNJ22, +0.21%, the most actively traded contract, climbed 35 cents, or 0.4%, at $88.52 a barrel.

West Texas Intermediate crude for March delivery CL00, +0.51% CL.1, +0.51% CLH22, +0.51% rose 21 cents, or 0.2%, to settle at $86.82 a barrel on the New York Mercantile Exchange after trading as high as $88.84, the highest intraday level since October 2014. For the week, front-month contract prices gained about 2%.

Among the petroleum products traded on Nymex, February gasoline RBG22, +0.98% added 0.8% to $2.542 a gallon, ending the week 4.1% higher. February heating oil HOG22, -0.64% fell 0.3% to $2.786 a gallon, paring its weekly rise to 3.5%. The February contracts expire at the end of Monday’s session.

The front-month contracts for both WTI and Brent are poised to settle at their highest prices since October 2014. They also closed at their highest since October 2014 on Wednesday, before settling back modestly in Thursday’s session, dogged in part by a surging U.S. dollar a day after the Federal Reserve set a hawkish tone at its first policy meeting of 2022.

“There are no new reasons to explain the renewed surge in the crude oil price: it is still concerns about supply disruptions if the Ukraine crisis escalates. The risk premium on the oil price is now likely to be almost $10,” said Carsten Fritsch, analyst at Commerzbank, in a note.

Russia has massed around 100,000 troops on Ukraine’s border as it demands that NATO never admit Ukraine and other ex-Soviet nations as members, and that the alliance roll back troop deployments in other former Soviet bloc nations — demands the U.S. and its allies have deemed nonstarters.

President Joe Biden warned Ukraine’s leader on Thursday of a “distinct possibility” Russia could take military action against it in February. Russian Foreign Minister Sergei Lavrov on Friday told Russian radio stations that there “won’t be a war as far as it depends on the Russian Federation, we don’t want a war,” but added “we won’t let our interests be rudely trampled on and ignored.”

Attention may also be turning to next week’s meeting of the Organization of the Petroleum Exporting Countries and its allies, which includes Russia.

OPEC+ has been sticking to a timetable in which it raises output by 400,000 barrels a day in monthly increments, resisting pressure from the U.S. and other oil consumers to boost output more quickly. Meanwhile, several OPEC+ producers have struggled to meet increased quotas.

Analysts said the group may be concerned by crude at current price levels, fearing a push above $90 a barrel or so could result in significant demand destruction.

Read: Why OPEC+ may not want $100 oil prices

“I think the OPEC+ meeting result will be a continuation of the current [production] targets,” said Michael Lynch, president at Strategic Energy & Economic Research.

Baker Hughes BKR, -1.78% on Friday reported that the number of active U.S. rigs drilling for oil was up by four to 495 this week, implying a future rise in oil production. That followed a fall of just one oil rig the week before, Baker Hughes data show.

Natural-gas futures rallied again on Friday. The March contract NGH22, +7.54% NG00, +7.54% rose 8.3% to $4.639 per million British thermal units, with prices based on the front month up nearly 23% for the week.

On Thursday, the February natural-gas contract surged 46% in a “classic” short squeeze on its expiration day, and as a winter storm looms in the Northeast.

See: Why natural-gas futures logged their biggest one-day percent gain on record

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