Oil prices rise after Russia announces production cuts of 500,000 bpd in March
Crude oil prices spiked on Friday after Russia announced retaliation against Western price ceilings with plans to reduce oil production by 500,000 barrels per day in March.
price action
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West Texas Intermediate Crude for March delivery
CL.1,
+2.18% up $1.91, or 2.4%, to $79.97 a barrel. The contract fell 0.5% to $78.06 a barrel on the New York Mercantile Exchange on Thursday.
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April Brent crude oil
BRN00,
+2.20% BRNJ23,
+2.20% ,
global benchmark, rose $2, or 2.3%, to $86.46 a barrel, after falling 0.7% to $84.50 a barrel on ICE Futures Europe on Thursday. -
gasoline in March
RBH23,
+1.61% up 1.7% to $2.4896/gallon, while heating oil in March
HOH23,
+2.71% up 3% to $2.90 a gallon.
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March of natural gas
NH23,
+0.66% rose 1.1% to $2,4580 per million British thermal units.
Market Drivers
in one declare on Friday, Russian Deputy Prime Minister Alexander Novak said the price ceiling imposed by Western governments was an “interference in market relations and the continuation of the destructive energy policy of the collective Western nations.” .
The EU bans imports Russia’s seaborne oil and oil products and together with the G7 has imposed a price ceiling on Russian oil and oil products transported by sea that took effect last year. Western governments have largely banded together to punish Russia for its invasion of Ukraine nearly a year ago.
Read: Zelenskyy ends European tour to rally support with visit to EU summit
“As one of the steps aimed at leveling the threat to the global oil market, Russia has introduced a ban, directly or indirectly, from the use of references to any illegal restrictions in contracts. oil supply,” Novak said.
He added: “So far, we are selling off all the oil we produce, however, as stated before, we will not be selling oil to those who directly or indirectly adhere to the guidelines. price ceiling rule”.
Read: Why US fuel prices continue to be affected by Russia’s invasion of Ukraine
Some observers see the price drop as a sign that Russia may have difficulty unloading its energy products.
Oil prices saw an impressive recent rally that came to a halt on Thursday. Still, U.S. crude is headed for a 9% gain for the week and Brent is near that level on Thursday, according to FactSet. The gains have been driven in part by hopes surrounding China’s reopening.
“The assumption, once they start lifting restrictions, is that the first quarter or two will be difficult but the second half will see growth unleashed by fiscal and monetary measures. bad. Craig Erlam, senior market analyst at OANDA, said it now looks like those expectations are being put in place to stimulate demand for oil and other commodities.