Title: Oil jittery as market weighs OPEC filling Russia supply gap

Mar 10, 2022 02:15AM ET

By: AnalysisWatch

Oil prices climbed in volatile trading on Thursday after dropping steeply in the previous session as the market wondered whether major players would increase their supply to cover the output void left by Russia's sanctions for its invasion of Ukraine.

At 1:51 a.m. ET, Brent crude futures were up $2.53, or 2.28 percent, to $113.67 per barrel after trading with a $5 spread. The benchmark contract had tumbled 13% in the previous session, its largest one-day decline in nearly two years.

U.S. West Texas Intermediate crude futures were up $1.64, or 1.51%, at $110.34 a barrel after trading in a $4 range. The contract had dropped 12.5% in the previous session, its steepest one-day decrease since November.

Uncertainty over where and when supply will arrive to substitute crude from the world's second-largest exporter, Russia, in a tight market has prompted wide-ranging forecasts for oil prices ranging from $100 to $200 a barrel.

Talks between the foreign ministers of Russia and Ukraine, scheduled for Thursday, also provided the market with a pause.

While the United Arab Emirates and Saudi Arabia have reserve capacity, some other OPEC+ producers are finding it difficult to meet their production targets as they have under-invested in infrastructure in recent years, restricting their ability to further boost production.

Crude inventories declined by 1.9 million barrels to 411.6 million barrels in the week to March 4, whereas analysts had expected a drop of 657,000 barrels in a Reuters poll.

US crude oil inventories in the Strategic Petroleum Reserve slipped to 577.5 million barrels, the weakest level since July 2002.