‘Barrels at any price.’ Relentless rally pushes oil prices past $110 as Russia-Ukraine war fuels panic
Oil prices surged past $110 a barrel to levels not seen since 2013 on Wednesday, as investors’ concerns mounted over potential supply disruptions from an intensifying Russia-Ukraine war.
- April West Texas Intermediate crude futures CL.1, 7.17% CL00, 7.06% CLJ22, 7.06% rose $4.72, or 4.6%, to $108.18 a barrel, a level not seen since Sept. 2013, after hitting an intraday high of $111.50. On Tuesday, the contract climbed 8% to settle at $103.41 a barrel on the New York Mercantile Exchange, the highest for a front-month contract since July 22, 2014, according to Dow Jones Market Data.
- May Brent crude BRN00, 6.79% BRNK22, 6.74%, the global benchmark, jumped $4.60, or 4.4%, to $109.55 a barrel, bringing the contract to its highest level since July 2014. The contract hit an intraday high of $113.02 a barrel. Brent finished Tuesday’s session with a 7.2% gain to close at $104.97 a barrel on ICE Futures Europe, the highest finish since Aug. 8, 2014.
- April natural gas NGJ22, 2.62% rose 2.8% to $4.704 per million British thermal units.
- April gasoline RBJ22, 5.54% climbed 3.4% to $3.195 a gallon. April heating oil HOJ22, 7.53% rose 6% to $3.343 a gallon. The contract rose 7.5% to $3.151 a gallon on Tuesday, the highest finish since February 2014.
Oil prices were already climbing on Tuesday amid concerns over war-fueled supply disruptions, when the International Energy Agency said its member countries agreed to release 60 million barrels of oil from their emergency reserves.
The gains continued in futures trading, with analysts commenting that the extra oil was a mere drop in the bucket of what would be needed to deal with potential disruptions.
That’s as global buyers shunned Russian oil, with Trafigura Group offering a deep discount on a cargo of Urals grade for $18.60 a barrel drawing no bids on Tuesday, Bloomberg and other media outlets reported.
Read: Oil surges, but history says prices eventually fall after countries release emergency reserves
“Russia is starting a new phase of the campaign, bringing a lot more force to bear and shelling civilian areas. This poses the risk that the West will encounter growing pressure to sanction Russian oil and gas exports, with all that would entail,” said Neil Wilson, chief market analyst for Markets.com, in a note to clients.
“Centrica said it is urgently seeking to end its natural-gas supply agreement with Gazprom — self-sanctioning already well under way. Exxon Mobil followed Shell and BP to say it will exit Russia, leaving $4 billion in assets in doubt. We are seeing this with the container ships too, and banks. Moreover oil traders are already starting to try to secure alternatives,” said Wilson.
War in Ukraine: Russian troops encircling key cities as assaults stepped up on urban areas in seventh day of conflict
Investors will now turn their attention to Wednesday’s monthly meeting of OPEC+ — the Organization of the Petroleum Exporting Countries and its allies, including Russia. The producer group is expected to make a decision on oil production levels for April, but analysts expect them to continue with a plan to raise production by 400,000 barrels a day.
Wilson said the cartel’s technical experts cut their expectations for the daily oil market surplus by 200,000 barrels to 1.1 million barrels, with fuel stockpiles in developed nations expected to be 62 million barrels below the 2015 to 2019 average by the end of 2022, from a previous shortfall of 20 million barrels.
“But the market is not really moving on this as much as just pure fear of immediate disruption to supplies; traders are getting hold of barrels at any price,” said Wilson.
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