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Oil futures were lower Thursday but were expected to remain subject to a tug of war between fears of a Russian invasion of Ukraine and signs of progress toward restoring a nuclear agreement with Iran.
Price action
-
West Texas Intermediate crude for March delivery
CL.1,
-1.92% CLH22,
-1.90%
fell $1.15, or 1.2%, to $92.51 a barrel on the New York Mercantile Exchange. -
April Brent crude
BRN00,
-1.92% BRNJ22,
-1.92%
was down $1.26, or 1.3%, at $93.55 a barrel on ICE Futures Europe. Both WTI and Brent ended Monday at their highest since September 2014. -
March natural-gas futures
NGH22,
-1.91%
fell 0.8% to $4.678 per million British thermal units. -
March gasoline
RBH22,
-2.04%
fell 1.2% to $2.6442 a gallon, while March heating oil
HOH22,
-2.44%
was down 1.5% at $2.8173 a gallon.
Market drivers
Oil futures temporarily trimmed a decline after the U.S. envoy to the United Nations was quoted as saying that there was evidence on the ground that Russia was preparing for an “imminent invasion” of Ukraine.
Read: Here’s the technology being used to watch Russian troops as Ukraine invasion fears linger
Russia earlier this week said it was withdrawing troops from near the Ukraine border. But NATO and U.S. officials said that Russia instead increased its forces near Ukraine by 7,000 troops.
Oil fell late Wednesday after Reuters reported that Iran’s top nuclear negotiator, Ali Bagheri Kani tweeted that after weeks of intensive talks “we are closer than ever to an agreement.” In the tweet, however, he stressed that “nothing is agreed until everything is agreed.” If the 2015 nuclear agreement with Iran is revived and economic sanctions are lifted, Iran may resume oil exports.
Meanwhile, uncertainty around Ukraine and the potential for supply disruptions from Russia have served to build on the premium for nearby Brent crude futures, noted Carsten Fritsch, commodity analyst at Commerzbank.
The gap between the first two Brent contracts (one-month vs. two months) had widened to $2.40 a barrel, while the gap between the front-month contract and the contract due in six months hit $8, and the spread between the front month and the contract due in 12 months widened to more than $12, he noted.
“Market participants are willing in other words to pay record-high premiums for oil deliverable at short notice because they continue to expect delivery outages,” Fritsch wrote.
