Oil Prices Dip After Surge, Remain On Track For Weekly Gain Amid Supply Fears

Summary:

U.S. crude futures eased in early trade on Friday, trimming part of the previous day's surge but remaining on track for a weekly gain, as fresh U.S. sanctions on Russia's two biggest oil companies over thewar in Ukrainefuelled supply concerns.

Brent crude futuresfell 17 cents, or 0.3%, to $65.82 by 0024 GMT. U.S. West Texas Intermediate crude futureswere up 17 cents, or 0.3%, at $61.62.

Both benchmarks jumped more than 5% on Thursday and were set for about a 7% weekly gain, the biggest since mid-June.

Russian President Vladimir Putin remained defiant on Thursday after U.S. President Donald Trump hit Russia's Rosneftand Lukoilwith sanctions to pressure the Kremlin leader to end the war in Ukraine. Rosneft and Lukoil together account for more than 5% of global oil output.

The U.S. sanctions prompted Chinese state oil majors to suspend Russian oil purchases in the short term, trade sources told Reuters. Refiners in India, the largest buyer of seaborne Russian oil, are set to sharply cut their crude imports, according to industry sources.

"Buying driven by supply tightness concerns over U.S. sanctions on Russia has subsided," said Satoru Yoshida, a commodity analyst with Rakuten Securities.

"With OPEC holding spare capacity, a one-sided rally is unlikely," he said, predicting that WTI is expected to trade within about $5 above or below $65.

Kuwait's oil minister said that the Organization of the Petroleum Exporting Countries would be ready to offset any shortage in the market by rolling back output cuts.

The U.S. said it was prepared to take further action, while Putin derided the sanctions as an unfriendly act, saying they would not significantly affect the Russian economy and talked up Russia's importance to the global market.

European Union countries also approved a 19th package of sanctions on Moscow that included a ban on Russian liquefied natural gas imports, while Britain hit Rosneft and Lukoil with sanctions last week.

Russia was the world's second-biggest crude oil producer in 2024 after the U.S., according to U.S. energy data.

Investors are also focusing on a planned meeting between Trump and Chinese President Xi Jinping next week.

Trade tensions between Washington and Beijing have been escalating, marked by tit-for-tat retaliatory measures announced by both sides. Confirmation that the two leaders would meet next week appeared to ease those tensions.

Source: Reuters

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Alice Winters

Japan's manufacturing sector contracted in October at the fastest pace in 19 months due to a sharper decline in new orders, a private-sector survey showed on Friday.

The S&P Global flash Japan Manufacturing Purchasing Managers' Index (PMI) fell to 48.3 in October from a final reading of 48.5 in September, hitting the lowest since March 2024. It has remained below the 50.0 threshold that separates growth from contraction for four straight months.

Among the sub-indexes, the decrease in factory output slowed from September, but new orders shrank at a faster rate, highlighting sluggish demand for manufacturers.

October's drop in new export orders, however, was the slowest since March. Data showed Japan's exports rose in September for the first time in five months.

The outlook for output also recovered to a three-month high, the PMI data showed.

"Manufacturers were more upbeat about the year ahead than service providers, with many hoping that a recovery in global economic conditions, new product releases and stronger demand for electronics in particular will help to boost output," said Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence.

The broader picture for Japan's corporate activity remains challenging, as service sector growth also slowed, with the flash Japan services PMI dropping to 52.4 in October from 53.3 in September.

The composite PMI, which combines both manufacturing and services, fell to 50.9 in October from 51.3 in September, marking the slowest growth in five months.

Inflationary pressures continued to build, with both input and output costs rising at faster rates than in September on a composite basis. Companies often linked the price increases to "higher employment, raw material and fuel costs, alongside a weak yen," Fiddes said.

Source: Investing

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Daniel Carter

Commodity

Oil was on track for the biggest weekly gain since June after US sanctions on major Russian producers upended the market, raising the prospect for supply disruptions and greater demand for alternative grades.

West Texas Intermediate traded near $62 a barrel on Friday after jumping 5.6% in the previous session, while Brent closed around $66. Russian crude flows to key buyer India are expected to plunge following the penalties on Rosneft PJSC and Lukoil PJSC, though the impact on China's purchases is less clear.

Still, President Donald Trump plans to raise Chinese buying of Russian oil with his counterpart Xi Jinping at a meeting next week. Moscow may look for the Asian nation to take more barrels if India exits the trade, but the world's second-biggest economy is unlikely to mop up all the surplus crude.

The US measures come at a time when global supply is swelling, and Russia has plenty of experience skirting sanctions — which have been implemented due to its war in Ukraine. Rosneft, headed by President Vladimir Putin's close ally, Igor Sechin, and Lukoil are the country's two largest producers.

President Donald Trump had held off on punishments against Russia, but the lack of progress on Ukraine has marked a dramatic U-turn. It's a radical shift of Western policy, which previously sought to limit revenue for the Kremlin through a price cap to prevent a major supply disruption and prices spiking.

The European Union also piled additional pressure on the Kremlin with a new package of sanctions targeting the country's energy infrastructure.

Source: Bloomberg Europe

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Manuel

Economic

The number of Americans filing new applications for jobless benefits increased last week, economists estimated on Thursday, and more people were collecting unemployment checks in early October amid easing labor market conditions.

Initial claims for state unemployment benefits rose to a seasonally adjusted 232,000 for the week ended October 18 from 220,000 the prior week, economists at Citigroup and Nationwide calculated. Goldman Sachs estimated claims at 227,000 while JPMorgan put the number at 229,000.

Claims data was unavailable for Tennessee, Massachusetts and Colorado. But economists made assumptions for the three states, similar to what the Labor Department would normally do when data is not available.

States continue to collect the claims figures, submitting them to the Labor Department despite a shutdown of the U.S. government that has caused an economic data blackout.

Economists have taken the unadjusted data to make estimates using seasonal adjustment factors the government published earlier this year, providing some view of the labor market.

Prior to the shutdown, now in its third week, signs of labor market softness were mounting, driven mostly by lackluster hiring that economists have blamed on the Trump administration's trade policy. The estimated claims have stayed within their pre-shutdown range, suggesting there has not been a material pickup in layoffs.

"The latest state-level jobless claims data suggests the labor market remains steady and that layoffs remain low," said Oren Klachkin, financial market economist at Nationwide. "Overall, initial claims remain subdued and aren't flagging an imminent economic downturn."

CLAIMS BY FEDERAL WORKERS HAVE SPIKED

But there has been a spike in applications by federal employees in recent weeks, likely related to the more than 150,000 workers who dropped off payrolls at the end of September after accepting buyouts.

Furloughed federal employees can apply for unemployment benefits, but they would have to reimburse the program when they receive their back pay. Claims for federal workers are reported under a different program. The latest data for the program was not immediately available.

The regular claims data covered the period during which the government would have surveyed employers for the nonfarm payrolls component of October's employment report.

Economists did not view the shutdown as negatively impacting the quality of October's payrolls count.

They, however, believed the delay could improve the response rate to the survey. A low response rate has been blamed for large revisions to payrolls data.

The Federal Reserve is expected to cut interest rates again next week to aid the labor market.

The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, increased to a seasonally adjusted 1.942 million during the week ending October 11 from 1.928 million, Citigroup estimated. Calculations for these so-called continuing claims by Goldman Sachs, JPMorgan and Nationwide were within that ballpark.

The elevated continued claims readings suggest unemployed people are experiencing difficulties landing new positions. The jobless rate rose to nearly a four-year high of 4.3% in August.

"This likely reflects the low hiring environment, as typically hiring would pick up in October for the holiday season," said Gisela Young, an economist at Citigroup. "Some indications suggest holiday hiring may be less than usual this year."

Source: Reuters

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Daniel Carter

Economic

Political

German Chancellor Friedrich Merz said he's optimistic that the US will exempt Rosneft PJSC's German unit from Washington's latest sanctions against Russia.

"We will discuss this with the Americans," Merz told reporters at a European Union summit in Brussels on Thursday. "I assume that a corresponding exemption for Rosneft will be granted."

The chancellor added that it was actually unclear whether the German business, Rosneft Deutschland, "even needs" an exemption, as the penalties say Rosneft must own at least 50% of the business. "It is 50%," he said.

There are concerns that Rosneft's German unit may be cut off from key customers without a US sanctions exemption, Bloomberg reported earlier. Oil traders, banks and oil companies have already threatened to end relationships with the company.

Merz welcomed the latest US sanctions against Russia on Thursday as an indication of President Donald Trump's determination to pressure Russia into ending its war against Ukraine.

The new US sanctions give customers until Nov. 21 to withdraw from "any entity" that's more than 50%-owned by the penalized Russian firms.

While Germany put Rosneft's local assets under a temporary trusteeship after Russia invaded Ukraine in 2022, it stopped short of nationalizing the business. That means Berlin will likely have to negotiate a carve out from the latest restrictions.

Source: Bloomberg Europe

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Manuel

Stocks

Intel (INTC) stock jumped as much as 7% after the bell Thursday as the chipmaker reported third quarter earnings and revenue that topped Wall Street's expectations.

Intel reported $13.7 billion in revenue for the three months ended Sept. 27, higher than the $13.15 billion expected by analysts tracked by Bloomberg and $13.28 billion the previous year. The chipmaker said that adjusted earnings per share was $0.23, above the $0.01 projected by Wall Street. The company reported a loss of $0.46 during the same period in 2024.

CEO Lip-Bu Tan said in a statement that "AI is accelerating demand for compute and creating attractive opportunities across our portfolio," including the company's closely-watched, struggling manufacturing business and its products. Intel Stock Jumps as Q3 Earnings Beat Expectations, AI Drives Chip Demand_1

Intel Stock Jumps as Q3 Earnings Beat Expectations, AI Drives Chip Demand_1

"We believe we're well-positioned to play a more significant role in AI," added Intel's head of investor relations John Pitzer in an interview with Yahoo Finance.

Intel makes CPUs, or traditional computer chips, used alongside AI chips in data center servers to power artificial intelligence software. Its CPUs are also used in computers including AI PCs.

The company said it expects fourth quarter adjusted EPS of $0.08, less than the $0.10 per share estimated by analysts, per Bloomberg consensus data. The chipmaker forecasts revenue of $13.3 billion at the midpoint of its projected range, below the $13.4 billion expected.

Intel said its fourth quarter guidance was below analyst estimates because the company's projections don't include revenue from Altera —a semiconductor firm owned by Intel that the company partly divested in the third quarter.

Intel's third quarter results follow a slew of high-profile investments from the US government, Nvidia (NVDA), and SoftBank (9984.T). The government took a 9.9% stake in the chipmaker in late August, while Nvidia's $5 billion investment amounted to a 4% ownership stake. The investments bolstered both Intel's balance sheet and investor hopes for a turnaround under new chief executive Lip-Bu Tan.

Still, analysts and investors have said those investments do little to change the state of Intel’s struggling third-party manufacturing segment. Intel has always manufactured its own chips, but it opened up the business to outside customers in 2021.

Intel's manufacturing arm, Intel Foundry Services, reported an operating loss of $2.3 billion for the third quarter, wider than the $2.2 billion expected but an improvement from the $5.8 billion loss in the previous year.

Creative Strategies principal analyst Ben Bajarin told Yahoo Finance that, overall, Intel's results Thursday were cause for "cautious optimism," but looking ahead, "all eyes move to foundry."

Wall Street fears that heavy spending on the relatively new segment may not pay off. So far, the business has failed to attract substantial commitments from outside customers. Policymakers, however, are heavily invested in the company's success due to its geopolitical significance: Most of the world’s computing chips are made in Taiwan, and Intel is the only US-based, large-scale advanced semiconductor manufacturer.

Complicating the path ahead for the business is the fact that Intel is no longer promoting its latest 18A chip production process as a way to attract outside customers. Initial reports indicated both Nvidia and Broadcom (AVGO) were testing the technology, but deals with the firms have failed to materialize.

Instead, Intel has shifted to primarily using 18A for its own internal products, including its Core Ultra series 3 chips for consumers and its Xeon 6+ next-generation data center chip, which is slated to launch in the first half of 2026.

Intel is now focusing on attracting customers through its next-generation advanced manufacturing process, dubbed 14A.

Intel's Pitzer told Yahoo Finance, "[W]e are very pleased by the feedback we're getting with early customer engagements. Quite frankly, where we are today on 14A is absolutely ahead of where we [were] at a similar point in time in the 18A development."

Source: Yahoo Finance

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Manuel

Commodity

Gold advanced, paring some of the week’s steep declines in a market that shifted from bullish enthusiasm to concerns of an overheated rally.

Spot gold rose 0.3% on Thursday, after seeing losses of about 6% over the previous two sessions. Investors continued to weigh the prospect that a US-China trade deal could relieve some of the geopolitical tensions that have bolstered demand for haven assets like gold in recent weeks.

“After an overstretched rally, gold is behaving like an elastic band that’s been pulled too far and is now snapping back hard,” said Hebe Chen, an analyst at brokerage Vantage Global Prime Pty Ltd. “Prices holding firm above the $4,000 mark point to a technical reset rather than a fundamental shift, with safe-haven demand and the ‘debasement trade’ still very much intact.”

The so-called debasement trade, in which investors avoid sovereign debt and currencies to protect themselves from runaway budget deficits, has been a driver of gold’s rally since mid-August. The metal is still up about 55% this year, with prices also supported in recent weeks by bets the Federal Reserve will make at least one quarter-point cut to interest rates by the end of the year.

Traders were piling into options to protect against the potential for further gyrations in gold prices. One-month implied volatility remains elevated, after surging to its highest since 2022 earlier this week.

The week’s price slump coincided with a large outflow from gold-backed exchange-traded funds, which on Wednesday posted the biggest single-day decline in their holdings in five months, according to data compiled by Bloomberg. Spot Gold Edges Higher After Two Days of Heavy Losses_1

Spot Gold Edges Higher After Two Days of Heavy Losses_1

Gold edged higher to $4,107.92 an ounce at 4:24 p.m. in New York. The Bloomberg Dollar Spot Index was little-changed. Silver rose 0.6%. Palladium and platinum slipped.