By Oil futures headed higher on Thursday, a day after Brent crude suffered its biggest one-day loss in nearly 2 years, as traders monitored developments in the Russia-Ukraine war.
Crude’s bounce was aided by remarks from the United Arab Emirates energy minister, who played down talk of an output boost by the Organization of the Petroleum Exporting Countries, or OPEC.
Price action
West Texas Intermediate crude for April delivery
CL00,
+1.60%
CL.1,
+1.59%
CLJ22,
+1.60%
rose $1.43, or 1.3%, to $110.13 a barrel on the New York Mercantile Exchange. The U.S. benchmark tumbled 12% on Wednesday, its biggest fall since Nov. 26.
May Brent crude
BRN00,
+2.47%
BRNK22,
+2.47%,
the global benchmark, advanced $2.31, or 2.1%, to $113.45 a barrel after a 13.2% drop in the previous session, its biggest one-day percentage retreat since April 21, 2020. Both WTI and Brent had closed Tuesday at nearly 14-year highs.
April natural gas
NGJ22,
+1.88%
rose 1.7% to $4.603 per million British thermal units.
April gasoline
RBJ22,
-0.86%
shed 0.6% to $3.274 a gallon and April heating oil
HOJ22,
-1.23%
lost 0.6% to $3.444 a gallon.
Market drivers
U.A.E. Energy Minister Suhail al-Mazrouei, on Twitter, said late Wednesday that the country “believes in the value OPEC+ brings to the oil market” and is “committed to the OPEC+ agreement and its existing monthly production adjustment mechanism.”
Earlier, UAE’s ambassador to the U.S., in a statement posted on Twitter, said: “We favor production increases and will be encouraging OPEC to consider higher production levels.”
OPEC+, which includes Russia, has resisted calls to increase production at a faster clip, instead continuing to lift output in monthly increments of 400,000 barrels a day, but it has struggled to even meet those targets given limited spare capacity among members. The U.A.E. and Saudi Arabia are seen among the few members capable of making a significant increase in output.
Oil traders have been pondering how the world would fill the hole in supply that would be created by a broad Western embargo of Russian oil after the U.S. earlier this week moved to ban imports of the country’s crude. Analysts have penciled in the possibility of oil hitting $200 a barrel or higher in such a scenario.
“Russia is the real issue” for oil, and Saudi Arabia is the country that can “instantly” bring oil to the market, Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch. However, Saudi Arabia “isn’t picking up the phone calls from our administration” regarding requests for more oil.
WTI oil could easily reach $130 or higher if the situation in Eastern Europe worsens, he said. Expect volatility to remain, with oil potentially moving $8 higher or lower “on a headline.”
Talks between Russia and Ukraine’s foreign ministers in Turkey, which took place early Thursday, failed to produce a breakthrough as Russian forces continued to assault Ukrainian cities as its invasion enters a second week.
Data released from the Energy Information Administration showed that domestic natural-gas supplies fell by a bigger-than-expected 124 billion cubic feet for the week ended March 4.
