Oil futures settled with a gain of nearly 4% on Wednesday after Russian President Vladimir Putin said negotiations with Ukraine had hit a dead end, raising concerns about further global losses of Russian oil.
Prices continued to trade higher even after U.S. government data showed a hefty weekly climb in domestic crude inventories, along with declines in stockpiles of gasoline and distillates.
West Texas Intermediate crude for May delivery
rose $3.65, or 3.6%, to settle at $104.25 a barrel on the New York Mercantile Exchange.
June Brent crude
the global benchmark, gained $4.14, or 4%, to end at $108.78 a barrel on ICE Futures Europe. Based on the front-month contracts, Brent and WTI ended at their highest since March 30, according to Dow Jones Market Data.
added 4.4% to $3.291 a gallon and May heating oil
climbed 7.3% to $3.718 a gallon.
May natural gas
settled at $6.997 per million British thermal units, up nearly 4.8%, after touching a high of $7.025. That marked the highest finish and intraday level since November 2008.
Putin on Tuesday said Russia “had no other choice” but to launch what he has termed a “special military operation,” pledging it would “continue until its full completion and the fulfillment of the tasks that have been set.”
Reuters on Tuesday reported that Russian oil and condensate production had fallen below 10 million barrels a day on Monday to its lowest since July 2020, as a result of sanctions and logistical problems.
The International Energy Agency, in its monthly report, said Wednesday that a move by the U.S. and its allies to release oil from their reserves — a move the IEA helped coordinate — should help counter the loss of Russia’s vast supplies after its invasion of Ukraine. Still, the IEA estimates that up to 3 million barrels a day of Russian oil could be lost to global markets by next month.
The Paris-based agency also cut its demand forecast for the year by 260,000 barrels to 99.4 million barrels a day due to a lockdown in Shanghai that has shut off the city of 25 million people.
Meanwhile, the Biden administration plans to allow the summertime sale of gasoline with 15% ethanol, which could provide savings of 10 cents per gallon on average, according to the White House.
Read: Biden to allow more ethanol in effort to ease gas prices — here’s what you need to know
Gasoline prices will be a little bit lower, but you’re going to “get less bang for your buck” as far as mileage goes, said Phil Flynn, senior market analyst at The Price Futures Group, adding that the benefit of using E15 during the summer is likely to be “negligible” in terms of savings at the pump.
The Energy Information Administration reported on Wednesday that U.S. crude inventories rose by 9.4 million barrels for the week ended April 8. The increase came on the back of a 3.9 million-barrel weekly decrease in crude stocks in the Strategic Petroleum Reserve.
On average, the EIA was expected to show crude inventories up by 300,000 barrels, according to analysts surveyed by S&P Global Commodity Insights. The American Petroleum Institute reported late Tuesday that U.S. crude supplies rose by nearly 7.8 million barrels.
The crude supply rise which was “partially explained by a steep and unexpected drop in the refinery utilization rate,” and contributed to a drawdown in gasoline and distillate stocks,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch.
The EIA reported weekly inventory declines of 3.6 million barrels for gasoline and 2.9 million barrels for distillates. The analyst survey showed expectations for supply declines of 800,000 barrels for gasoline and 1.5 million barrels for distillates.
However, products supplied, a measure implied demand, fell by over 1 million barrels to 18.8 million barrels a day. That’s the lowest level since last June, suggesting that high prices are “beginning to weigh on consumer demand,” said Richey.
Crude stocks at the Cushing, Okla., Nymex delivery hub edged up by 400,000 barrels for the week, according to the EIA.