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Oil futures declined on Thursday but were expected to remain subject to a tug of war between support from fears of a Russian invasion of Ukraine and pressure from signs of progress toward restoring a nuclear agreement with Iran.
Price action
-
West Texas Intermediate crude for March delivery
CL.1,
-1.94% CLH22,
-1.94%
fell $2.41, or 2.6%, to $91.25 a barrel on the New York Mercantile Exchange. -
April Brent crude
BRN00,
-1.91% BRNJ22,
-1.91%
was down $2.39, or 2.5%, at $92.42 a barrel on ICE Futures Europe. Both WTI and Brent ended Monday at their highest since September 2014. -
March natural-gas futures
NGH22,
-4.13%
fell 2.1% to $4.62 per million British thermal units after posting a gain of 9.5% Wednesday. -
March gasoline
RBH22,
-1.93%
fell 2.6% to $2.608 a gallon, while March heating oil
HOH22,
-2.27%
was down 3.3% at $2.764 a gallon.
Market drivers
Oil futures temporarily trimmed a decline after the U.S. envoy to the United Nations was quoted as saying that there was evidence on the ground that Russia was preparing for an “imminent invasion” of Ukraine.
Read: Here’s the technology being used to watch Russian troops as Ukraine invasion fears linger
Russia earlier this week said it was withdrawing troops from near the Ukraine border. But NATO and U.S. officials said that Russia instead increased its forces near Ukraine by 7,000 troops.
Oil fell late Wednesday after Reuters reported that Iran’s top nuclear negotiator, Ali Bagheri Kani tweeted that after weeks of intensive talks “we are closer than ever to an agreement.” If the 2015 agreement with Iran is revived and economic sanctions are lifted, Iran may resume oil exports.
“There’s no shortage of volatility in the oil market at the moment, with multiple forces combining to create very lively conditions,” said Craig Erlam, senior market analyst at OANDA, in a market update.
The market is obviously extremely tight and prices “could already be in triple-figure territory if not for the nuclear talks between the U.S. and Iran,” he said.
Meanwhile, uncertainty around Ukraine and the potential for supply disruptions from Russia have served to build on the premium for nearby Brent crude futures, noted Carsten Fritsch, commodity analyst at Commerzbank, with the spread between the front month and the contract due in 12 months widening to more than $12.
“Market participants are willing in other words to pay record-high premiums for oil deliverable at short notice because they continue to expect delivery outages,” he said.
Natural-gas prices, meanwhile, declined after Wednesday’s rally. The Energy Information Administration reported Thursday that U.S. supplies of the fuel fell 190 billion cubic feet last week.
