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Oil futures gave up early losses Wednesday to trade solidly higher, as traders weighed risks to global crude supplies amid sanctions on Russia and the potential for a full invasion of Ukraine.
Price action
West Texas Intermediate crude for April delivery
CL.1,
+0.34%
CL00,
+0.82%
CLJ22,
+0.82%
rose $1.31, or 1.4%, to $93.22 a barrel on the New York Mercantile Exchange.
April Brent crude
BRNJ22,
+0.82%
the global benchmark, was up $1.30, or 1.3%, at $98.14 a barrel on ICE Futures Europe after trading as high as $98.71. Prices were on track for another front-month contract finish at the highest since 2014.
March natural-gas futures
NGH22,
+2.45%
rose 3% to $4.632 per million British thermal units.
March gasoline
RBH22,
+0.67%
rose 1.6% to $2.754 a gallon and March heating oil
HOH22,
+0.25%
tacked on 0.9% to $2.843 a gallon.
Market drivers
Crude rose on Tuesday as investors reacted to Russian President Vladimir Putin’s decision to deploy troops to separatist regions of Ukraine, fanning fears of a full-scale invasion and prompting the announcement of sanctions by the U.S. and its allies against Moscow.
Oil and natural-gas prices remain elevated “as a conflict in Ukraine significantly increases the risk of disruptions to Russian supply and sanctions,” said Pat Thaker, editorial director, Middle East & Africa at Economist Intelligence Unit. “While the Ukraine crisis remains fluid, [the] extremely tight energy market is facing significant risk premium.”
Read: Russia’s move into Ukraine is boosting commodity prices — here’s what’s at stake
Also see: U.S. drivers brace for the highest gas prices in 9 years as oil approaches $100 a barrel
Still, some analysts said the announced measures against Russia, and remarks by Biden administration officials, have lowered concerns about sanctions affecting the flow of crude oil.
“Sanctions announced up until now should not have much impact on Russian oil exports,” said Warren Patterson, head of commodities strategy at ING, in a note. “Local banks which are heavily involved within the commodities industry have been left untouched.”
President Joe Biden on Tuesday said the U.S. was sanctioning two Russian banks as well as the country’s sovereign debt, as he blamed Moscow for what he called the beginning of an invasion of Ukraine. Germany halted the certification of the Nord Stream 2 pipeline, which was slated to boost flows of natural gas from Russia to Western Europe.
According to news reports, a senior State Department official said the sanctions announced Tuesday and in the near future wouldn’t target oil and gas flows.
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