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Futures Movers: U.S. oil prices build on gains scored after inventory drop; Brent ends lower

Oil futures finished Thursday on a mixed note, with U.S. prices building on gains scored a day earlier after data showed an unexpected drop in U.S. crude inventories, but global Brent prices giving back some of its recent climb.

Traders also kept close tabs on talks that could return Iran to an international nuclear accord, freeing up oil exports. Tensions around Ukraine also remained in focus.

Price action

West Texas Intermediate crude for March delivery
CL.1,
+0.54%

CL00,
+0.54%

CLH22,
+0.54%

rose 22 cents, or nearly 0.3%, to $89.88 a barrel on the New York Mercantile Exchange.

April Brent crude
BRN00,
+0.11%

BRNJ22,
+0.11%
,
the global benchmark, fell 14 cents, or nearly 0.2%, to $91.41 a barrel on ICE Futures Europe.

March natural-gas futures
NGH22,
-0.75%

fell nearly 1.3% to $3.959 per million British thermal units.

March gasoline
RBH22,
+0.38%

rose about 0.5% to $2.665 a gallon while March heating oil
HOH22,
+0.12%

added nearly 0.1% at $2.827 a gallon.

Market drivers

The “hot inflation report sent the dollar higher, which tentatively dragged down commodities,” including oil prices, said Edward Moya, senior market analyst at OANDA. However, oil market fundamentals “remain very tight and with no immediate changes to that outlook, crude prices seem poised to go higher.”

Crude earlier this week pulled back from seven-year highs as investors focused on signs of progress in talks aimed at returning Iran to the nuclear agreement. The Trump administration pulled the U.S. out of the deal in 2018, reimposing sanctions on Iranian crude exports. Analysts have estimated Iran could return around 1 million barrels a day of crude to the market within a year of an agreement.

But obstacles to a renewed deal remain, and even if an agreement were reached, Iran wouldn’t be able to return crude to the market “at the stroke of a pen,” said Helima Croft, head of global commodity strategy at RBC Capital Markets, in a note.

President Joe Biden and King Salman of Saudi Arabia on Tuesday discussed energy supplies and rising fuel prices as well as developments in the Middle East in a Wednesday phone call, according to news reports.

The call “is a clear indication that the Kingdom will be the principal recipient of American solicitations given that it is the only country sitting on significant spare capacity,” Croft wrote.

Traders also kept an eye on developments around Ukraine. Russian troops began joint drills in Belarus, underlining worries about a military buildup near Ukraine that has fueled Western fears of an invasion.

Also Thursday, the Organization of the Petroleum Exporting Countries, in its monthly report, left its forecast for oil-demand growth in 2022 unchanged at 4.2 million barrels a day.

Supply data

The Energy Information Administration reported Thursday that domestic natural-gas supplies fell by 222 billion cubic feet for the week ended Feb. 4, generally in line with market forecasts.

Read: How natural gas will play a ‘transition role’ in the move toward net-zero carbon emissions

The data followed an EIA report released Wednesday that showed weekly declines in U.S. crude, gasoline and distillate supplies.

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