Oil futures rose Tuesday, building on the highest finish for the U.S. benchmark since 2008, as Washington and its allies look to ban or reduce purchases of energy from Russia.
West Texas Intermediate crude for April delivery
rose $8.29, or 6.9%, to $127.69 a barrel on the New York Mercantile Exchange after ending Monday at its highest since Sept. 22, 2008.
May Brent crude
the global benchmark, was up $8.21, or 6.7%, at $131.42 a barrel on ICE Futures Europe after finishing Monday at its highest since April 5, 2012.
rose 6% to $3.766 a gallon, after finishing Monday at a record. April heating oil
jumped 11.8% to $4.382 a gallon.
April natural gas
was down 4% at $4.639 per million British thermal units.
Oil futures marched higher again in the wake of Russia’s Feb. 24 invasion of Ukraine while the European Union presented a plan to reduce its dependency on Russian energy, with a pledge to cut its purchases of Russian gas by two-thirds before the end of the year, according to a report from CNBC.
U.S. President Joe Biden, meanwhile, is expected to announce a ban on Russia oil imports, reports said Tuesday. Russia is the world’s second-biggest petroleum exporter and usually exports 4.5m barrels of crude and 2.5m of oil-products each day. However, last year only about 8% of U.S. imports of oil and petroleum products came from Russia.
Although sanctions against Moscow announced so far have exempted energy flows, a number of buyers and other market participants have shunned Russian crude oil out of fear of potentially falling afoul of legal restrictions or in response to criticism. Shell PLC
said Tuesday that it plans to withdraw from Russian oil and gas in a phased manner, including an immediate halt on all spot purchases of Russian crude.
Read: Why Russian oil can’t find buyers even as crude soars above $100 a barrel
“This is the tightest fundamental backdrop in years and the developments in Russia/Ukraine have ignited a market that was already a coiled spring,” said Michael Tran, commodity analyst at RBC Capital Markets, in a note. “How high can oil prices go? Pick a number, this is a market in disarray.”
Read: What soaring oil prices mean for the stock market as Dow tumbles into correction
Meanwhile, U.S. retail gasoline prices continue to jump at the pump as well as in the futures market. The national average price for a gallon of gasoline hit $4.173 early Tuesday, AAA reported, exceeding the previous record of $4.114 set in July 2008.
See: ‘Americans have never seen gasoline prices this high — nor have we seen the pace of increases so fast and furious’