Oil futures settled Tuesday at their highest in a week, finding support on ongoing hopes for a revival in crude demand from China and on oil supply issues in the Middle East following a massive earthquake in Turkey.
A devastating earthquake on Monday left thousands dead in Turkey and Syria and led to a halt in operations at Turkey’s Ceyhan oil export terminal, with has a capacity of 1 million barrels a day. However, Reuters reported that Iraqi oil flows to the Ceyhan export hub resumed on Tuesday.
See: How to help Turkey earthquake victims: ‘Give cash’ and ‘take the long view’
- West Texas Intermediate crude for March delivery CL.1, +4.32% CL00, +4.32% CLH23, +4.32% rose $3.03, or 4.1%, to settle at $77.14 a barrel on the New York Mercantile Exchange, the highest front-month contract finish since Jan. 31, according to Dow Jones Market Data. Prices posed a gain of 1% on Monday.
- April Brent crude BRN00, +0.20% BRNJ23, +0.20%, the global benchmark, rose $2.70, or 3.3%, to $83.69 a barrel on ICE Futures Europe, also the highest in a week.
- March gasoline RBH23, +3.71% rose 3.5% at $2.4568 a gallon, while March heating oil HOH23, +4.87% gained 4.9% to $2.9044 a gallon.
- March natural gas NGH23, +5.13% added 5.2% to $2.584 per million British thermal units.
Earlier crude was lifted Monday after Saudi Arabia unexpectedly raised most prices for oil to be shipped to Asia, reflecting increased demand for crude, analysts said.
“The price of the barrel is finding support as the reopening of the Chinese economy, following the end of the zero-COVID policy, is expected to drive a significant increase in demand for crude this year,” said Ricardo Evangelista, senior analyst at ActivTrades, in a note.
“At the same time, the earthquake in Turkey forced the shutting down of a major export terminal, responsible for 1 million barrels per day, exacerbating supply side pressures and contributing to increases in oil prices,” he said.
Reuters reported Tuesday that the Iraqi crude pipeline to Turkey’s Ceyhan oil export hub has resumed flows to the Ceyhan oil export hub, but exports of Azeri crude from Azerbaijan were still stopped. A tanker was docked at the Ceyhan port to load crude, though bad weather earlier in the day had prevented loading, it said.
ActivTraders’ Evangelista, meanwhile, noted that gains for crude prices have come alongside a bounce for the U.S. dollar. Typically a stronger dollar is a negative for commodities priced in the unit, making them more expensive to users of other currencies.
The ICE U.S. Dollar Index DXY, -0.21%, a measure of the currency against a basket of six major rivals, trades 1.3% higher for the month, but edged down by 0.2% in Tuesday dealings as traders digested remarks from Federal Reserve Chairman Jerome Powell.
At the Economic Club of Washington on Tuesday, Powell said the strong U.S. jobs report released on Friday showed that the Fed needs to keep increasing interest rates, but he also expects “significant declines” in U.S. inflation this year.
Read: Strong jobs report a sign Fed needs to do more to quell inflation, officials say
In a monthly report released Tuesday, the Energy Information Administration raised its 2023 forecasts for WTI and Brent crude oil prices, but sharply cut its 2023 and 2024 forecast for U.S. natural-gas prices.
“U.S. natural gas inventories fell by less than our expectations in January because of the warmer-than-average weather. With more natural gas in inventory, we reduced our forecast for natural gas prices over the coming year,” EIA Administrator Joe DeCarolis said in a statement.
The EIA will release its weekly U.S. petroleum supply report Wednesday morning.
On average for the week ended Feb. 3, analysts expect the report to show a supply gains of 2.1 million barrels for crude, 1.6 million for gasoline and 100,000 barrels for distillates, according to a survey conducted by S&P Global Commodity Insights.