top of page

U.S. oil prices top $70 for first time in over 2 weeks on concerns over tight supply

Price moves

West Texas Intermediate crude for January delivery rose $1.70, or 2.5%, to settle at $70.29 a barrel on the New York Mercantile Exchange, with prices ending at their highest since Nov. 22, according to Dow Jones Market Data.

February Brent crude the global benchmark, climbed by $1.33, or 1.8%, at $73.52 a barrel on ICE Futures Europe.

January gasoline added 1.5% at $1.99 a gallon, while January heating oil rose 1.7% to $2.22 a gallon.

Natural gas for January delivery settled at $3.38 per million British thermal units, up 6.8% Wednesday. Month to date, it’s up just 0.5%.

U.S. oil prices top $70 for first time in over 2 weeks on concerns over tight supply

Crude-oil prices ended higher for a third straight session on Wednesday, with China’s plans to boost its economy expected to lift energy demand and as talk of potential new U.S. oil sanctions on Russia raised prospects for tighter global supplies.


Official U.S. data released Wednesday also revealed a weekly fall in domestic crude supplies for a third consecutive week, while the major oil producers known as OPEC cut their oil-demand growth forecasts for this year and next.


Market drivers


Oil prices gained following a report by Bloomberg, citing people familiar with the matter, that the Biden administration is considering new sanctions on Russian oil in a effort to weaken Russia’s ability to fund its war with Ukraine, before incoming U.S. President Donald Trump takes office.


A U.S. intelligence assessment concluded that Russia may use its lethal intermediate-range ballistic missile against Ukraine again in the coming days, the Associated Press reported, citing a U.S. official.


That would “definitely amp up the risk,” and with reports that the U.S. is looking to toughen sanctions on Russia, there may be “some protection buying in the [oil] complex,” Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch.


New Russian oil sanctions had been “previously avoided due to concerns over global energy cost spikes,” said Stephen Innes, managing partner at SPI Asset Management. But “bolder measures are now deemed viable, with oil prices currently subdued by a global surplus and increasing anxieties that the incoming administration may push for a swift resolution to the conflict in Ukraine.”


“This shift could impose new pressures on one of the world’s largest oil producers,” he said in a daily note. “Until the specifics of the sanctions are revealed, this could establish a floor under oil prices,” said Innes. “If the sanctions prove substantial, we could see oil prices climb higher.”


Support for oil has also been tied to the recent pledge by China’s Politburo on more aggressive stimulus measures.


“Experts see supporting domestic spending and investment as key factors to support growth,” said Samer Hasn, senior market analyst at XS.com. “The crystallization of the impact of the recent support packages and reforms over the next year, in conjunction with easy monetary conditions, should accelerate the recovery,” he wrote in market commentary.


Oil prices were up despite the Organization of the Petroleum Exporting Countries, in a monthly report Wednesday, lowering its forecast for 2024 global oil demand growth by 210,000 barrels per day from the November report to 1.6 million barrels per day, year-on-year. For 2025, it also cut its oil demand growth forecast by 90,000 barrels per day to 1.4 million barrels per day.


The reductions marked the fifth month in row that OPEC has lowered its oil demand growth projections, according to The Wall Street Journal. OPEC’s downward revision likely “partially reflects the challenging growth outlook in China,” said Kenny Zhu, research analyst, Global X, in emailed commentary.


Supply data


Weekly data on U.S. petroleum supplies from the Energy Information Administration released Wednesday showed decline of 1.4 million barrels in U.S. commercial crude inventories for the week ended Dec. 6.


The report was expected to show a decline of 600,000 barrels on average, according to a survey of analysts conducted by S&P Global Commodity Insights. Late Tuesday, the American Petroleum Institute reported a crude inventory climb of 499,000 barrels, according to a source citing the data.


The EIA also reported weekly supply gains of 5.1 million barrels for gasoline and 3.2 million barrels for distillates. The S&P Global Commodity Insights survey forecast inventory gains of 1.7 million barrels each for gasoline and distillates.


U.S. oil production was up by 118,000 barrels at 13.631 million barrels per day in the latest week, the EIA said. That’s a fresh record high.


Crude stocks at the Cushing, Okla., Nymex delivery hub fell by 1.3 million barrels to 22.9 million barrels, data showed. Demand for gasoline rose, with total motor gasoline supplied, a proxy for demand, at 8.810 million barrels per day in the latest week, from 8.738 million bpd from a week earlier.


Separately, a monthly report from the EIA released Tuesday showed expectations for a oil supply deficit this year, with total world oil output forecast at 102.6 million barrels per day and total world consumption at 103.0.



Read More: Here

bottom of page