Last Up Crude-oil futures settled higher on Thursday, with both the U.S. and international benchmarks tapping intraday highs above $100 for the first time since 2014, as Russian troops and tanks pushed into Ukraine and airstrikes hit the country in an attack authorized by President Vladimir Putin in a televised address to his nation.
Price action
· West Texas Intermediate crude for April delivery CLJ22, 1.84% CL00, 1.
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· April Brent crude BRNJ22, 2.02% BRN00, 2.
· Both international and U.S. contracts hit their highest intraday level since 2014.
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· March natural gas NGH22, +0.95% NG00, +0.95%
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· March gasoline RBH22, +1.65% added 1.7% to $2.771 a gallon and March heating oil HOH22, +1.94% rose 2.4% to $2.897 a gallon.
Market drivers
The Russian attack on Ukraine is viewed as the largest such military operation in Europe since the Balkan Wars of the 1990s and possibly since World War II and is likely to spark concerns about supply disruptions, during a period of uncertainty in the global economy underpinned by COVID worries and supply-chain bottlenecks.
Russia supplies between 30% and 40% of Europe’s natural gas.Analysts have said that the Ukraine conflict increases the risk of disruptions to Russian oil and natgas supplies and the sanctions and the effect of higher oil prices, could exacerbate global inflationary pressures.
President Joe Biden unveiled additional U.S. sanctions against Russia on Thursday, blocking more banks, but analysts had said the latest sanctions could include kicking Russia out of the SWIFT payment network. Biden said a move on WIFT remains an option.
Stewart Glickman, energy equity analyst at CFRA Research, said his company believes Biden has “little appetite for policy moves that would cause further pain at the pump for U.S. drivers.”
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So, there’s a risk of WTI prices overshooting the mark and settling back in the $90 range, and that would “reflect the existing tight market for crude, but would be absent sanctions that matter,” he said.
Supply data
The Energy Information Administration reported on Thursday that U.S. crude inventories rose by 4.5 million barrels for the week ended Feb. 18. Data were released a day later than usual due to Monday’s Presidents Day holiday.
On average, analysts had forecast a decline of 300,000 barrels, according to a poll conducted by S&P Global Platts.
The American Petroleum Institute late Wednesday reported a 6 million-barrel increase, according to sources.
The EIA also reported weekly inventory declines of 600,000 barrels each for gasoline and distillates. The S&P Global Platts survey expected supply declines of 1.1 million barrels each for gasoline and distillates.