Oil futures turned higher on Friday, giving up earlier declines, after reports of an attack on an oil facility in Saudi Arabia renewed concerns over global crude supplies.
Prices for oil had been trading lower as European Union countries failed to agree on a ban on imports of Russian crude. Ongoing supply concerns, meanwhile, have set prices up for the first weekly gain in three weeks. Price action
- West Texas Intermediate crude for May delivery CL.1, 0.96% CL00, 0.97% CLK22, 0.96% rose 86 cents, or 0.8%, to $113.20 a barrel on the New York Mercantile Exchange, with the contract trading up nearly 10% for the week.
- May Brent crude BRN00, 1.41% BRNK22, 0.90%, the global benchmark, was up 63 cents, or 0.5%, at $119.66 a barrel on ICE Futures Europe, with the contract up almost 11% for the week.
- April natural gas NGJ22, 2.94% rose 1.5% to $5.481 per million British thermal units — trading up nearly 13% for the week.
- April gasoline RBJ22, 1.89% rose 1.3% to $3.435 a gallon, eyeing a more than 6% rise on the week, while April heating oil HOJ22, -1.69% declined 2.5% to $4.051 a gallon, with prices up over 12% from the week-ago finish.
A fire erupted Friday at an oil depot in Jeddah, Saudi Arabia, and Yemen’s Houthis rebels acknowledged they had launched a series of attacks on the kingdom, the Associated Press reported, citing videos.
“Reports of a hit on Saudi Armaco is coming at a time were supply risk is higher than it had been in years,” Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch. “This is only going to make the supply demand deficit worse.”
The U.S. and U.K. have moved to ban imports of crude from Russia following its invasion of Ukraine, but several European Union countries have resisted pressure for an embargo due to their heavy reliance on supplies from the country.
“The risk of disruption to Russian oil production keeps prices high despite any formal announcement to embargo Russian crude by any significant consumer,” said Stephen Innes, managing partner at SPI Asset Management, in a daily note. “Only the U.S. and U.K. have said they will no longer purchase Russian crude and products,” he said, estimated that total amount of oil involved is around 900,000 barrels a day in aggregate.
With oil trading only a few dollars lower, it “suggests the EU embargo was always a low-probability outcome,” said Innes.
Besides, “it’s tough to be short oil as U.S. inventories continue to dwindle” and there are bound to be more supply shocks in the future, he said.
“Oil prices could remain very sticky at current levels and eventually push higher when China eases all COVID restrictions in catch-up mode to the rest of the world,” Innes said.
Meanwhile, the Caspian Pipeline Consortium said crude loadings have resumed out of its terminal on Russia’s Black Sea coast, after an interruption earlier this week due to bad weather, noted Warren Patterson, head of commodities at ING, in a note.
President Joe Biden, speaking in Brussels, announced an agreement that would see the U.S. boost trans-Atlantic shipments of liquefied natural gas as part of a long-term plan aimed at weaning Europe off its dependence on Russian gas.
Among its objectives, the U.S. will work with international partners and look to ensure additional liquefied natural-gas volumes for the EU market of at least 15 billion cubic meters in 2022, with expected increases going forward, the White House said.
Looking ahead, major oil producers known as OPEC+ will meet Thursday to decide on production levels for May.