Oil continues to surge on supply concerns; Brent crude crosses $118/bbl

Oil continues to surge on supply concerns; Brent crude crosses $118/bbl

Oil prices continued to surge on Thursday, with Brent crude crossing the $118/bbl mark, on concerns about a major shortfall in global supplies as the Russia-Ukraine war intensifies.

02:15 hours GMT
Contract
Low
High
Open
Last
Previous
Change
High Change

Brent
May
114.85
118.22
115.27
116.55
112.93
3.62
5.29

WTI
Apr
110.6
114.7
111.33
113.41
110.6
2.81
4.1

Overnight, Brent crude closed 9.6% higher to its highest since August 2014, while US WTI crude ended the session up 7%.

Worries that oil supply will remain tight for months to come following sanctions on Russia and ensuing massive divestments by major companies from Russian oil assets continue to drive up prices.

Meanwhile, oil cartel OPEC and its allies (OPEC+) on Wednesday agreed to stick to their original plan of a gradual increase in production, noting that the current price movement was a result of geopolitics.

As planned, OPEC+ crude output will rise by 400,000 bbl/day in April.

“However, whilst members believe that the current price environment reflects geopolitical risks, it is becoming clearer that the Russia-Ukraine conflict is having an impact on the demand for Russian oil,” Netherlands-based ING said in a note on Thursday.

“Buyers are increasingly reluctant to commit to Russian oil given sanctions risk,” it said.

Further indication of tight supply in the US also continued to fire up oil markets.

Latest numbers from the Energy Information Administration (EIA) showed that US commercial crude oil inventories fell by 2.6m bbl/day over the last week.

“Concern over broader tightness in the global market, along with falling Cushing inventories has seen the prompt WTI time spread balloon to a backwardation of almost $3.60/bbl,” ING said.

Published: 03-03-2022