Oil futures ended lower on Thursday, a day after global benchmark prices suffered the biggest one-day percentage loss in nearly 2 years, with developments in the Russia-Ukraine war continuing to feed volatile price swings.
Crude had spent some timing trading higher early Thursday, aided by remarks from the United Arab Emirates energy minister, who played down talk of an output boost by the Organization of the Petroleum Exporting Countries, or OPEC.
West Texas Intermediate crude for April delivery
fell $2.68, or 2.5%, to settle at $106.02 a barrel on the New York Mercantile Exchange. The U.S. benchmark tumbled 12% on Wednesday, its biggest fall since Nov. 26.
May Brent crude
the global benchmark, shed $1.81, or 1.6%, to $109.33 a barrel after a 13.2% drop in the previous session, its biggest one-day percentage retreat since April 21, 2020. Both WTI and Brent had closed Tuesday at nearly 14-year highs, and settled Thursday at their lowest since March 1, according to Dow Jones market Data.
April natural gas
rose 2.3% to $4.631 per million British thermal units.
U.A.E. Energy Minister Suhail al-Mazrouei, on Twitter, said late Wednesday that the country “believes in the value OPEC+ brings to the oil market” and is “committed to the OPEC+ agreement and its existing monthly production adjustment mechanism.”
Earlier, UAE’s ambassador to the U.S., in a statement posted on Twitter, said: “We favor production increases and will be encouraging OPEC to consider higher production levels.”
OPEC+, which includes Russia, has resisted calls to increase production at a faster clip, instead continuing to lift output in monthly increments of 400,000 barrels a day, but it has struggled to even meet those targets given limited spare capacity among members. The U.A.E. and Saudi Arabia are seen among the few members capable of making a significant increase in output.
Oil traders have been pondering how the world would fill the hole in supply that would be created by a broad Western embargo of Russian oil after the U.S. earlier this week moved to ban imports of the country’s crude. Analysts have penciled in the possibility of oil hitting $200 a barrel or higher in such a scenario.
Meanwhile, the Intercontinental Exchange said it would raise margin requirements for the May Brent oil futures contract on ICE Futures Europe by 32%, effective Friday. Margins are money investors must put up to be able to trade and hold futures contracts.
“Russia is the real issue” for oil, and Saudi Arabia is the country that can “instantly” bring oil to the market, Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch. However, Saudi Arabia “isn’t picking up the phone calls from our administration” regarding requests for more oil.
WTI oil could easily reach $130 or higher if the situation in Eastern Europe worsens, he said. Expect volatility to remain, with oil potentially moving $8 higher or lower “on a headline.”
“ Expect volatility to remain, with oil potentially moving $8 higher or lower “on a headline.” ”
— Tariq Zahir, Tyche Capital Advisors
Talks between Russia and Ukraine’s foreign ministers in Turkey, which took place early Thursday, failed to produce a breakthrough as Russian forces continued to assault Ukrainian cities as its invasion enters a second week.
Data released from the Energy Information Administration showed that domestic natural-gas supplies fell by a bigger-than-expected 124 billion cubic feet for the week ended March 4.