A trader works on the floor of the New York Stock Exchange (NYSE) in New York, USA, March 1, 2022.
Brendan McDermid Reuters
US oil rose to its highest level since 2013 during overnight trading on Tuesday, with the global reference Brent exceeding $ 110 per barrel, while the violent rally in crude oil continues. Progress comes as OPEC and its oil-producing allies, including Russia, prepare to meet on Wednesday to discuss production in April.
Crude oil futures West Texas Intermediate, US oil, jumped more than 5% to $ 109.23 a barrel, the highest level since at least September 2013. During regular trading, the contract rose 8.03% to established at 103.41 dollars per barrel.
Brent’s global crude oil benchmark rose 5.6 percent to $ 110.84, the highest level since July 2014. During Tuesday’s session, the contract rose 7.15 percent to $ 104.97 a barrel.
“There is no break. This is a dramatic moment for the market, the world and supply,” said John Kildeff, a partner at Again Capital. “It is clear that the world will have to oppose Russia by banning its oil exports,” he added, noting that the market could not afford to lose.
Both WTI and Brent rose above $ 100 last Thursday for the first time since 2014 after Russia invaded Ukraine, raising concerns about supplies in an already tight market.
“Crude oil prices can’t stop rising, as a very tight oil market is likely to put additional supply risks as the war in Ukraine unfolds,” said Ed Moya, a senior market analyst at Oanda. “Brent crude could jump to $ 120 if the oil market starts to think that sanctions on Russian energy are likely to be imposed.
On Tuesday, International Energy Agency member states announced plans to release 60 million barrels of oil stocks in a bid to ease rising oil prices. As part of this, the United States will release 30 million barrels.
But the announcement did not reassure the markets.
“We do not see this as sufficient relief,” Goldman Sachs wrote in a note to customers after the announcement. “Destroying demand – through even higher prices – is now probably the only sufficient mechanism to restore the balance, and the elasticity of supply is no longer relevant to such a potential big and immediate shock in supply,” the company added.
Both WTI and Brent are already up more than 40% for the year so far, as demand recovers while supply remains limited. Global producers have kept production under control, and OPEC and its oil-producing allies are slowly returning the barrel to market after implementing an unprecedented cut in supply of nearly 10 million barrels per day in April 2020.
Most recently, the group increased production by 400,000 barrels per day each month.
“We believe that the producer group is likely to continue the course with the current easing schedule and avoid a deepening security crisis involving the group’s co-chair Russia,” RBC wrote in a note to clients.
The company noted that “there may be a change in strategy in the coming weeks” if there is an actual physical disruption to supplies.
Russia is a key producer and exporter of oil and gas – especially for Europe. So far, the country’s energy complex has not been directly subject to sanctions. However, there are ripple effects of financial sanctions imposed on Russia, which have made some foreign buyers reluctant to buy energy products from Russia.
– Patty Dom of CNBC contributed to the report.