Myra P. Saefong and Williams Watts, MarketWatch

SAN FRANCISCO
EnergiesNet.com 03 18 2022

Oil futures settled higher Friday after talks between Moscow and Kyiv made little progress, but prices still registered a loss of more than 4% for the week.

Price action

• West Texas Intermediate crude for April delivery CL.1, +2.06% CL00, +0.29% CLJ22, +2.06% rose $1.72, or 1.7%, to settle at $104.70 a barrel on the New York Mercantile Exchange, with the front-month contract posting a 4.2% weekly fall, according to Dow Jones Market Data.
  
  
• May Brent crude BRN00, +0.25% BRNK22, +0.25%, the global benchmark, climbed $1.29, or 1.2%, to $107.93 a barrel on ICE Futures Europe, for a 4.2% weekly decline.
  
  
• April gasoline RBJ22, +0.79% rose 0.7% to $3.239 a gallon, ending 2.2% lower for the week.
  
  
• April heating oil HOJ22, +3.64% added 3.2% to $3.598 a gallon, logging a 5.3% climb for the week.
  
  
• April natural gas NGJ22, -1.70% settled at $4.863 per million British thermal units, down nearly 2.6% for the session, but up 2.9% for the week.

Market drivers

“This week’s volatility dances around the confusion on what to make of the Russian oil exports,” said Manish Raj, chief financial officer at Velandera Energy Partners.

He told MarketWatch that all eyes are on Russia oil export volumes for April and May bookings, which so far have “yielded few buyers.”

Still, “unless Russians find a way to skirt around the sanctions, oil prices are poised to test new highs,” said Raj.

Talks between Moscow and Kyiv stalled after signs of optimism earlier this week that fueled a reversal to the downside by crude futures, which had hit nearly 14-year highs last week.

Russian forces continued to press attacks on Ukraine cities.

The Kremlin on Friday said Russian President Vladimir Putin told German Chancellor Olaf Scholz, in a phone call, that Ukraine was stalling talks with “unrealistic proposals,” according to news reports. Separately, U.S. President Joe Biden and Chinese leader Xi Jinping held talks Friday, with the U.S. threatening action if China backs Russia in its war with Ukraine.

Meanwhile, world leaders are pushing for an investigation of Russia’s repeated attacks on civilian targets, including airstrikes on schools, hospitals and residential areas.

The U.S. and its allies have hit Russia with severe sanctions, with Washington also banning imports of Russian crude. Western sanctions have largely attempted to exempt Russian energy flows, but analysts and others have warned that Russian supply is likely to be sharply curtailed in the months ahead.

Read: Commodities offer traders a wild ride, but some are drawn to volatility like flies ‘to a light bulb’

Also see: Why Russia’s invasion of Ukraine lifted uranium prices to their highest in over a decade

“The news from Russia and Ukraine with respect to the peace talks no longer sounded nearly as optimistic as it did before, which has doubtless prompted the market to reassess the situation,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note.

Wednesday‘s forecast from the International Energy Agency also had an impact, he said, warning that the market could end up missing 3 million barrels a day of crude and oil products from Russia beginning in April.

Read: Oil can reach $200 per barrel, this red-hot hedge-fund manager says

In a press release Friday, the IEA said there are measures that advanced economies can take to “achieve significant reductions in oil demand in a matter of months” to reduce the risk of a major supply crunch. It said its “10-Point Plan to Cut Oil Use” would lower oil demand by 2.7 million barrels a day within four months.

marketwatch.com 03 18 2022