Oil futures on Friday marked their first weekly loss since mid-December, as prospects for restoring the Iran nuclear deal outweighed fears of supply disruptions should Russia invade Ukraine.
Price action
- West Texas Intermediate crude for March delivery CL.1, -0.34% CL00, +0.24% fell 69 cents, or nearly 0.8%, to settle at $91.07 a barrel on the New York Mercantile Exchange. The front-month March contract posted a 2.2% weekly loss ahead of its expiration at Tuesday’s settlement.
- April Brent crude BRN00, +0.01% BRNJ22, +0.01%, the global benchmark, rose 57 cents, or 0.6%, to settle at $93.54 a barrel on ICE Futures Europe, but saw a roughly 1% weekly decline. The weekly losses for WTI and Brent were the first since mid-December.
- March natural gas NG00, -1.38% fell 1.2% to $4.431 per million British thermal units, leaving it up 12.4% for the week. Read a related story
- March gasoline futures RBH22, +0.99% rose 0.8% to $2.67 a gallon, while March heating oil HOH22, +0.03% shed 0.2% to $2.782 a gallon. Gasoline logged a 2.5% weekly fall, with heating oil down nearly 4.5%.
Market drivers
The U.S. is indirectly participating in international negotiations with Iran in Vienna. Reuters on Thursday reported that a draft agreement laid out a series of mutual steps that would bring both sides back into full compliance, but didn’t include immediate waivers on oil sanctions.
“There is no doubt that lifting of Iranian oil sanctions could soften the blow against the potential disruption of a Russia-Ukraine war,” Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch. Still, it is “unclear as to how much more oil [Iran] could actually add to the global marketplace.”
Troy Vincent, senior market analyst at DTN, thinks a successful deal and lifting of Iranian oil export sanctions would “not even come close to offsetting a potential supply disruption or sanctions against Russian oil.”
He said Russia produces around 11 million barrels per day of crude and condensate and exports just over 5 million of that, while Iran produces closer to 2.5 million bpd.
DTN estimates the potential for Iranian supply returning to market this year due to lifting of sanctions at closer to 1 million to 1.3 million bpd, and that Iran would “tap storage and begin to push their inventories onto the global market as soon as physically possible,” said Vincent. Even then, “this could not offset Russian volumes if indeed there was a material impact to Russian exports and pipeline flows.”
Diplomatic efforts aimed at heading off a Russian invasion were being closely watched, with Biden expected to speak with European leaders on Friday. U.S. officials said they expect a Russian attack on Ukraine in the next few days.
Add Comment