Oil shot across $90 for the first time since 2014 as winter weather in the U.S. threatened to shut in some oil production while geopolitical tensions continued to keep investors on edge.
West Texas Intermediate settled above $90 a barrel as markets assessed multiple bullish indicators. Traders question whether the OPEC+ coalition will be able to meet their quotas in full after agreeing to add supply to the market, while in the short-term extreme cold in the Permian Basin is curtailing some U.S. output. Geopolitical fears continue to add risk to the upside as Russia-Ukraine tensions ratchet higher and drone strikes continue in the Middle East.
“The path of least resistance remains to the upside, when we got through yesterday’s high the volume picked up and the rocket ship blasted off,” said Spencer Vosko, director for crude oil at Black Diamond Commodities LLC.
Crude is heading for a seventh weekly gain, with banks including Goldman Sachs Group Inc. seeing oil moving toward $100 a barrel. Oil’s rally poses a challenge for consuming nations and central banks as they try to stave off inflation while supporting global growth. Consumers around the world have contended with surging fuel costs for transportation and heating as oil prices march toward triple digits.
Investors continue to track developments over Ukraine amid concerns that Russia may invade, even though Moscow has said it has no such plan. An attack carries the potential to upend energy flows, stoking prices. Oil historian Daniel Yergin said further escalation over Ukraine could send prices to $100 a barrel, while JP Morgan sees the possibility of $120 oil in that scenario.
- WTI for March delivery rose $2.01 to settle at $90.27 a barrel in New York.
- Brent for April settlement gained $1.64 to settle at $91.11 a barrel.
Geopolitical tensions are also prevalent in the Middle East, as the United Arab Emirates said three hostile drones that entered its airspace on Wednesday had been intercepted. This comes days after the UAE fended off a missile attack by fighters based in Yemen.
With oil and gas prices near multiyear highs, supermajor Shell Plc unveiled a bumper set of fourth-quarter earnings on Thursday that comfortably exceeded analysts’ estimates.
Published at Thu, 03 Feb 2022 12:28:26 -0800