Market Close: March 03 Up, Diesel Up less than a penny
Mar 3rd, 2022 by loren
Oil futures saw choppy trade Thursday, ending lower after the U.S. benchmark traded at a nearly 14-year high as traders weighed the Russia-Ukraine war and speculation around the potential for a restored nuclear accord that would allow Iran to resume crude exports.
Price action
- April West Texas Intermediate crude futures fell $2.93, or 2.7%, to end at $107.67 a barrel after trading at a session peak of $116.57, the highest since August 2008.
- May Brent crude global benchmark, dropped $2.47, or 2.2%, to settle at $110.46 a barrel after trading as high as $119.84.
- April natural gas declined 0.8% to $4.722 per million British thermal units.
- April gasoline fell 0.7% to end at $3.2844 a gallon. April heating oil rose 0.3% to $3.5034 a gallon.
Market drivers
Oil bounced between gains and losses after an Iranian journalist tweeted than an agreement on a renewed nuclear deal was imminent. The U.S. has indirectly participated in global talks aimed at restoring the nuclear accord after the Trump administration withdrew the U.S. from the deal in 2018. “Iran could secure a nuclear deal this month and that means the 80 million barrels of oil in storage could hit the market fairly soon,” said Edward Moya, senior market analyst at Oanda, in a note. “Iran nuclear talks are entering the final stage and that should put a short-term cap with the recent rally in oil prices,” he said.
Crude’s historic rally has left futures technically overbought, with the relative strength index for WTI near 74 (a reading of more than 80 is viewed as extreme). “The market will need to suck in new participants who are not necessarily crude oil traders to trade higher — needs to suck in newbies — and top off the rally before a much deserved pullback flushes the weaker length from the scene,” said Robert Yawger, executive director for energy futures at Mizuho Securities, in a note. A scramble for U.S. and Brent crude comes as global buyers have been shunning Russian oil, even at deeply discounted prices.
OPEC+ earlier this week decided to stick with its plan to increase output by 400,000 barrels a day in April, continuing to resist calls for more aggressive production increases. Analysts said the decision by the International Energy Agency to release 60 million barrels from the emergency oil reserves of member countries earlier this week was also insufficient to balance the current demand, against the backdrop of the Ukraine war.
Natural gas remained lower after the Energy Information Administration reported a withdrawal of 139 billion cubic feet of the fuel from storage last week, in line with analyst estimates.
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