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Oil prices held ground Thursday at their highest levels in more than seven years as investors remain focused on the threat of a Russian attack on Ukraine.
“The market is on guard for a potential disruption of supply because globally supplies remain very tight,” said Phil Flynn, senior market analyst at The Price Futures Group.
Meanwhile, a “blowout” U.S. gross domestic product number also raised some concerns that the Federal Reserve might be even more aggressive in raising interest rates,” he said. “That is playing into the speculation that we could see five interest rate increases this year.”
The U.S. economy expanded at an annual 6.9% pace in the fourth quarter, stronger than the 5.5% rise expected by economists polled by The Wall Street Journal.
West Texas Intermediate crude for March delivery
CL.1,
CLH22,
edged up by 10 cents, or 0.1%, to $87.45 a barrel on the New York Mercantile Exchange after posting a climb of 2% Wednesday.
March Brent crude
BRNH22,
the global benchmark, added 4 cents, or nearly 0.1%, at $90 a barrel on ICE Futures Europe after trading as high as $91.04. April Brent
BRN00,
BRNJ22,
the most actively traded contract, tacked on 4 cents, or nearly 0.1%, to $88.78 a barrel.
Both WTI and Brent closed Wednesday at their highest since October 2014.
Oil spent some time Thursday trading lower, with the strong dollar weighing on dollar-denominated prices, said Flynn, but “the market is still concerned about this tight supply situation in the rising geopolitical risk.”
Crude wobbled after Wednesday’s close as the Fed teed up a March rate increase and Chairman Jerome Powell struck a hawkish tone in his news conference. Oil then found its footing, however.
A more pronounced price slide was prevented “by the Ukraine crisis, as there are still concerns that Russian oil and gas deliveries could be hampered in the event of a military escalation,” said Carsten Fritsch, analyst at Commerzbank, in a note.
Russia is the world’s third largest oil producer and second largest supplier of natural gas.
Russia has massed around 100,000 troops on Ukraine’s border as it demands that NATO never admit Ukraine and other ex-Soviet nations as members and that the alliance roll back troop deployments in other former Soviet bloc nations — demands the U.S. and its allies have deemed non-starters.
Read: How a Russian invasion of Ukraine could trigger market shock waves
Also see: Tensions between Russia and Ukraine aren’t fully priced into commodities
Oil has also seen overall support “as demand prospects continue to improve thanks to the strong pace of economic growth across the world,” said Walid Koudmani, market analyst at XTB, in a note.
“On the other hand, this price area has managed to act as a resistance in the past and unless we see a significant catalyst, prices might struggle to remain at these levels for an extended period as governments attempt to contain rising energy prices,” he said.
Among the petroleum products traded on Nymex, February gasoline
RBG22,
tacked on 0.4% to $2.532 a gallon and February heating oil
HOG22,
added 0.5% to $2.757 a gallon.
Natural-gas futures, meanwhile, headed higher after the U.S. Energy Information Administration reported on Thursday that domestic supplies of the fuel fell by 219 billion cubic feet for the week ended Jan. 21. IHS Markit had forecast a decline of 209 billion cubic feet.
Ahead of its expiration at the end of the session, February natural gas
NGG22,
traded at $4.394 per million British thermal units, up 2.7%. March natural gas
NGH22,
added 1.7% to $4.103.
