Oil climbs to highest since March as US considers crude purchases | Business and Economy News
Prices were also supported by OPEC+ which ratified a limited production increase following the European Union’s proposed ban on Russian imports.
Oil jumped to the highest since late March after a report said the United States planned to solicit bids this fall to replenish its emergency crude reserves.
West Texas Intermediate jumped more than 3% to top $111. The Biden administration plans to solicit bids for 60 million barrels of crude oil as the first step in a years-long process to replenish the dwindling U.S. emergency oil reserve, CNN reported, citing a Department of energy. Prices were also supported by OPEC+ which ratified a limited production increase following the European Union’s proposed ban on Russian imports.
The U.S. plans to buy in a tight market with low inventories and low spare capacity, said Giovanni Staunovo, commodities analyst at UBS Group AG. “That’s what the market is pricing now.”
Oil has jumped more than 40% this year as war disrupted flows, inflation accelerated and central banks – including the US Federal Reserve – began to tighten policy. The dollar was higher on Thursday, adding a headwind to crude, after the Fed raised interest rates to the highest since 2000.
The EU said this week it would ban Russian crude for the next six months and refined fuels by the end of the year to increase pressure on President Vladimir Putin over his invasion of the EU. Ukraine. The bloc is also targeting insurers in a move that could significantly harm Moscow’s ability to ship oil around the world.
- WTI for June delivery added 2.7% to $110.80 a barrel at 9:18 a.m. New York.
- Brent for July settlement rose 3% to $113.45 a barrel.
Currently, Russia’s oil exports are unfolding at a record pace as Moscow manages to reroute shipments previously sent to the United States and elsewhere to other buyers, particularly in Asia, according to the note.
The EU aims to conclude the sanctions package by the end of the week, or May 9 at the latest, according to diplomats. To push the brakes over the line, the bloc must address concerns from Hungary and Slovakia over the phase-out schedule, and questions from Greece over a ban on oil transport between third countries.
Further supporting the markets, OPEC and its allies will nominally increase production by 432,000 barrels per day in June. However, OPEC only managed a 10,000 barrel per day increase in April, indicating the group‘s difficulty in increasing production according to its plan.
With all the potential supply restrictions, oil markets remain in reverse, an uptrend marked by short-term prices trading above longer-term ones. Among key spreads, the spread between the two closest December contracts for Brent was above $13 a barrel on Thursday. This is more than triple the gap at the start of the year.
(Previous version corrected from April to second paragraph.)