Oil prices surged due to escalating geopolitical tensions spanning from Russia to Iran, coupled with a stronger stock market boosting the appeal of risk assets. West Texas Intermediate (WTI, Financial) crude rose over 1%, closing above $71 per barrel, marking a weekly gain of more than 6%. Brent crude also saw its settlement price exceed $75 per barrel for the first time since early November. The rapid escalation of conflict between Russia and Ukraine, with both sides deploying longer-range missiles, contributed to this rise. Additionally, Iran's announcement to increase its centrifuge count following a UN condemnation added to the geopolitical strain.
The stock market's rally also supported oil prices, although the strengthening dollar limited the gains by reducing the appeal of dollar-denominated commodities. Indicators of a bullish oil market emerged, as evidenced by the WTI spot price spread rising to 48 cents, indicating tighter supply. WTI January futures rose 1.6% to settle at $71.24 per barrel, while Brent January futures increased 1.3% to $75.17 per barrel.
Copper prices are on track to experience the longest weekly losing streak since 2019, pressured by the rising dollar. LME copper fell 0.5% to $8,968 per ton, while aluminum, zinc, nickel, tin, and lead saw mixed movements.
Gold is poised for its largest weekly gain in 20 months, driven by safe-haven demand amid the escalating Russia-Ukraine conflict. Gold prices spiked 1.5% to $2,710.16 per ounce as geopolitical tensions prompted investors to seek refuge in gold. Market participants are also evaluating the potential for the Federal Reserve to ease monetary policy, which typically benefits non-yielding assets like gold. Spot gold increased 1.5% to $2,708.71 per ounce, while silver rose 1.6% to $31.2935 per ounce.
