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Oil prices pushed higher on Wednesday, with supply worries hovering over the market as the war in Ukraine neared a one-month mark and U.S. inventory data loomed for later.
Price action
-
West Texas Intermediate crude for May delivery
CL00,
+3.78% CLK22,
+3.78%
rose $2.49, or 2.2%, to $111.74 a barrel, after slipping 0.6% on Tuesday. The previous front month April contract fell 0.3% to settle at $111.76 a barrel on the New York Mercantile Exchange. -
May Brent crude
BRN00,
+3.87% BRNK22,
+3.87% ,
the global benchmark, climbed $2.78, or 2.4%, to $118.28 a barrel. The contract settled 0.1% lower on Tuesday at $115.48 a barrel on ICE Futures Europe. -
April gasoline
RBJ22,
+2.10%
rose 1.2% to $3.337 a gallon, while April heating oil
HOJ22,
+1.68%
rose 1.7% to $3.87a gallon. -
April natural gas
NGJ22,
+1.87%
rose 0.3% to $5.203 per million British thermal units.
Market drivers
Supply concerns linked to Russian’s invasion of Ukraine that shows no signs of letting up, were again helping to drive gains for crude on Wednesday, with U.S. oil up 8% and Brent climbing 10% so far this week.
“Crude oil prices are higher on continued supply worries, and a big inventory drop reported by private forecasters (API) of 4.28 million barrels,” said Peter Cardillo, chief market economist at Spartan Capital. “However, while we expect the DOE to show a drawdown, the decline is likely to baround 1 million barrels.”
The API also reportedly showed weekly inventory declines of 626,000 barrels for gasoline and 826,000 barrels for distillates, sources said.
Investors are keeping close watch on a four-day trip by President Joe Biden that begins Thursday, with meetings with NATO, the Group of Seven, and the EU aimed at shoring up the campaign against Russia.
Oil prices have been gaining this week on speculation the EU bloc may vote to sanction Russian oil, echoing moves by the U.S. and the U.K., though some say those expectations have dimmed somewhat.
Opinion: Ukraine war is a wake-up call to ditch oil and gas forever
“It seems that market participants no longer view an immediate EU import ban on oil from Russia as likely. There is still considerable resistance in those EU countries that are heavily dependent on Russian oil,” said Carsten Fritsch, analyst at Commerzbank.
“However, they might still change their stance if Russia were to further escalate its targeting of the civilian population in its war in Ukraine,” he said, in a note to clients. Russia was keeping up its offense across Ukraine on Wednesday, with its forces accused of kidnapping a humanitarian convoy headed to besieged Mariupol.
Fritsch said Russia remains challenged in trying to sell its oil, with the price discount on Urals as compared with Brent now up to $27 per barrel.
Read: Jamie Dimon tells Biden that U.S., Europe need ‘Marshall Plan’ for energy independence: report
