By Ketki Saxena
Investing.com – As of 2:45 p.m E.T. WTI futures were at $103.50, or up 8.90% in the day’s trading so far. Brent was at $107.22, or up 9.39% so far today. Both benchmarks gained from continued Russia-Ukraine volatility, particularly after the International Energy Agency announcement today that 3 million barrels per day (BPD) of Russian oil and products could be shut in from next month. The projected loss is nearly triple the 1 million BPD drop in demand anticipated from higher fuel prices and factors such as lockdowns in China. Morgan Stanley (NYSE:MS) raised its Brent price forecast by $20 for the third quarter to $120 a barrel.
Pessimism about the outcome of Russia-Ukraine peace talks, reinforced by the EIA report has seen oil prices recover from an aggressive sell-off this last week as investors sought to rapidly realize gains in a quickly shifting situation.
Gasoline Futures, closely correlated to the price of crude, were up 7.68% at the time of writing.
Natural gas was at $4.976, up 4.80% in the day’s trading so far today. As prices continue to rise on Russian supply concerns, despite partial regulatory approvals for the U.S. to export capped quantities of LNG, including to Europe. Europe’s dependence on Russian natural gas will be difficult to replace, and unlikely in the near term, particularly as suppliers struggle to also meet quickly rising demand from Asia.
The surge in natural gas prices was bolstered by the EIA’s weekly inventory report, which today reported a withdrawal of 79 Bcf natural gas from storage for the week ended March 11. The greater than anticipated withdrawal was supported by cold weather across the Midwest and Eastern seaboard of North America. Another withdrawal is expected next week, but less significant, as temperatures rise.
Coal continues to hover near recent record highs. Coal is another commodity being driven higher by the Russia-Ukraine crisis. Russia is a key exporter of coal, a fossil fuel that accounts for about 35% of global power generation. Continued or further disruptions in gas supply would also lead to heightened demand for coal as an alternative.
China and India, massive consumers of both LNG and coal, would likely switch to cheaper coal in order to supply fuel to their substantial populations. European nations like Italy and Germany also plan to turn to coal as a backup if natural gas is not available or affordable enough.