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Oil futures were on the rise again Thursday, a day after Brent crude suffered its biggest one-day percentage loss in nearly 2 years, as traders monitored developments in the Russia-Ukraine war.
Crude’s bounce was aided by remarks from the United Arab Emirates energy minister, who played down remarks made Wednesday by the country’s ambassador to Washington in favor of an output boost by the Organization of the Petroleum Exporting Countries, or OPEC.
Price action
-
West Texas Intermediate crude for April delivery
CL00,
+4.29% CLJ22,
+4.29%
jumped $4.49, or 4.1%, to $113.19 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
BRN00,
+4.34% BRNK22,
+4.34% ,
the global benchmark, advanced $5.40, or 4.9%, to $116.54 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.
Market drivers
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.
The remarks come as traders ponder 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.
“Clearly, there appear to be mixed messages coming from the U.A.E. regarding its policy towards oil production, which will certainly not help during these volatile times,” said Warren Patterson, head of commodities strategy at ING, in a note.
Crude’s Wednesday retreat was also tied to optimism over talks between Russia and Ukraine’s foreign ministers in Turkey, but those discussions, 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.
