Oil set to close lower for second straight week
Oil prices fell in early trading on Friday and were set to close lower for a second straight week, as rising prospects of a Russia-Ukraine peace deal offset concerns over supply disruptions from a blockade of Venezuelan oil tankers.
Brent crude futures fell 9 cents, or 0.2%, to $59.73 a barrel by 0111 GMT, and U.S. West Texas Intermediate crude was trading 16 cents, or 0.3% lower, at $55.99 a barrel. On a weekly basis, both benchmarks were down more than 2%.
U.S. President Donald Trump on Thursday said he believes talks toward ending the war in Ukraine are "getting close to something" ahead of a U.S. meeting with Russian officials this weekend.
In the other potential geopolitical catalyst, it was not immediately clear how the U.S. would enforce Trump's announcement to blockade tankers under sanctions entering and leaving Venezuela, which makes up around 1% of global supplies. In an unprecedented move, the U.S. Coast Guard last week seized a Venezuelan oil tanker.
"Uncertainty over enforcement details and optimism that a potential U.S.-led Ukraine peace deal could still emerge (are) easing global supply concerns and tempering geopolitical risk premiums," IG analyst Tony Sycamore said on Friday.
Further measures targeting Russian oil could pose a greater supply risk to the market than Trump's Venezuela blockade of tankers, analysts say.
Venezuela on Thursday authorized two unsanctioned very large crude carriers to set sail for China, according to two sources familiar with Venezuela's oil export operations.
Analysts at Bank of America anticipate the lower price of oil will reduce the amount of supply, which could prevent a free fall in prices.
"A rally from current levels that breaks above resistance at $56.70–$56.90ish would strengthen the case that this week's selloff to the $54.98 low was a false break lower," IG's Sycamore said.
"Conversely, a break below $54.98/90ish would reignite downside momentum, targeting the psychological $50.00 level."
