Friday, 2 December, 2022
HomeEconomyCrude oil climbs to near $106, after gaining on doubts over peace...

Crude oil climbs to near $106, after gaining on doubts over peace talks between Russia-Ukraine

Market has been driven by developments surrounding the war & concerns about lockdowns in China, with a liquidity crunch adding to oil’s volatility, leaving prices vulnerable to big swings.

Text Size:

Oil extended gains after the biggest daily surge in 16 months pushed prices back above $100 a barrel as the Kremlin cast doubt on the progress of peace talks with Ukraine.

Futures in New York rose to trade near $106 a barrel after jumping 8.4% on Thursday. Crude rallied after the Kremlin said a report of major progress in negotiations over Ukraine was “wrong,” but that discussions will continue. Oil is still set for a second weekly loss after another tumultuous period of trading that’s seen West Texas Intermediate swing over $9 in three sessions.

The market has been whipsawed by developments surrounding the war and concerns about virus lockdowns in China, with a liquidity crunch adding to oil’s volatility and leaving prices vulnerable to big swings. Chinese President Xi Jinping pledged to reduce the economic impact of his Covid-fighting measures, offering some optimism that the hit to oil demand won’t be so severe.

Russia’s invasion of Ukraine has fanned inflation, providing a challenge to central banks and governments as they seek to encourage economic growth after the pandemic. The Federal Reserve this week raised interest rates and signaled further hikes to tackle the fastest price gains in four decades.

“It seems to me that the market is just panicking and chasing its tail,” said Jeffrey Halley, a senior market analyst for Oanda Asia Pacific Pte. “We are going to get more intraday volatility. Oil is going to sit between $100-$120 a barrel, that’s going to be the rough range over the next month.”

Prices
  • WTI for April delivery rose 2.5% to $105.59 a barrel on the New York Mercantile Exchange at 7:20 a.m. in London.
    • Prices are down 3.4% this week.
  • Brent for May settlement gained 2% to $108.82 on the ICE Futures Europe exchange after surging 8.8% on Thursday.
    • Prices are down 3.5% this week.

On the supply front, Libya said Wednesday that OPEC should ramp up production faster to ease the energy crisis. Saudi Arabia’s Crown Prince Mohammed bin Salman told the Japanese Prime Minister a day later that the kingdom is keen to maintain the oil market’s balance and stability, state-run SPA reported.

Russian crude is still being treated with extreme caution by buyers worried about damage to their reputation or falling foul of sanctions. Since the invasion of Ukraine, the lion’s share of oil refining companies across Europe have said they will scale back purchases from Moscow.

Global benchmark Brent has swung by more than $5 a barrel for 16 consecutive sessions — the longest run of such volatility ever. The extent of the liquidation shows up in open interest figures. Holdings for WTI fell to the lowest since 2016, while those for Brent were the lowest since 2015. – Bloomberg.


Also read: India always exploring options in energy imports, MEA on buying discounted oil from Russia


 

Subscribe to our channels on YouTube & Telegram

Support Our Journalism

India needs fair, non-hyphenated and questioning journalism, packed with on-ground reporting. ThePrint – with exceptional reporters, columnists and editors – is doing just that.

Sustaining this needs support from wonderful readers like you.

Whether you live in India or overseas, you can take a paid subscription by clicking here.

Support Our Journalism

Most Popular