DTN Oil

WASHINGTON (DTN) -- Capping an earlier advance, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Wednesday's session with modest gains after reports emerged suggesting the Biden administration is considering another release of crude oil from the Strategic Petroleum Reserve to cool off oil prices in the face of a potential supply disruption in Eastern Europe.

With the international crude benchmark climbing towards $100 barrel (bbl) on the back of escalating tensions in Eastern Europe this week, U.S. President Joe Biden is once again building the case for a globally coordinated crude stockpile release. The news follows Tuesday's announcement by the International Energy Agency that member countries "stand ready to act collectively to ensure that global oil markets are adequately supplied."

In November, Biden ordered a release of 50 million bbl from the SPR when Brent crude traded above $70 bbl.

The SPR held 584.8 million bbl as of Feb. 11, the lowest level for the emergency reserves since September 2002. Meanwhile, commercial crude oil inventories in the United States are also low at 411.508 million bbl -- about 10% below the five-year average.

Ahead of updated weekly inventory data through Feb. 18, market analysts have called for commercial crude inventories to have risen by 300,000 bbl, as refiners reduce demand amid seasonal maintenance programs. Gasoline stockpiles are expected to have fallen 1.5 million bbl from the previous week, while stocks of distillates are seen to have decreased by 2 million bbl.

The American Petroleum Institute will release its weekly inventory report at 4:30 p.m. EST, followed by official statistics from the U.S. Energy Information Administration Thursday morning, delayed one day due to Monday's observance of U.S. Presidents' Day.

DTN Refined Fuels Demand data shows gasoline demand in the United States is bouncing higher as omicron fades further and mask mandates are increasingly being dropped, gaining 2% from the previous week and up more than 25% year-on-year.

Markets remain laser-focused on the developing situation along the Russian-Ukrainian border. Ukraine President Volodymyr Zelensky declared a 30-day state of emergency beginning midnight Thursday (2/24), restricting movement of conscripted reservists within Ukraine, banning mass gatherings and strikes, and banning production and distribution of information materials that could further destabilize the situation in the country.

Markets are in a waiting mode now to see how far Russia's 190,000 troops will go into Ukraine after the Russian Parliament gave Russian President Vladimir Putin the greenlight to use troops outside of country. The central question is whether he will stop the advance with two pro-Russian republics in eastern Ukraine, or order troops to capture Kiev, Ukraine's capital. The current news flow is not encouraging, with the Russian government ordering the evacuation of all its staff in Kiev.

Zelensky called on military reserves to face off with the Russians, while Putin suggested Russia recognized the two breakaway republics in their "expanded version."

Donbass and Lugansk are currently divided into two parts -- Russian and Ukrainian -- with the Ukrainian military in control of about two-thirds of the territory. This includes a strategic seaport of Mariupol that is home to Ukraine's largest steel mills and its biggest machine-building company that produce much of the country's exports.

Depending on Putin's next move in the Ukraine, U.S. and European allies may consider an additional round of sanctions on top of the measures already announced in response to Moscow's recognition that the two republics are independent from Ukraine. So far, the sanctions package does not target Russian oil and gas exports or the economy, but instead restricts access to capital markets for certain Russian banks and individuals. Among the tougher measures announced this week, Germany suspended approval of the Nord Stream 2 pipeline which was completed last year and has awaited European Union regulatory approval since late November. The $11 billion pipeline designed to carry Russian gas under the Baltic Sea to northern Germany would sharply increase the share of Russian gas consumed in Europe.

On the session, NYMEX West Texas Intermediate for April delivery edged 19 cents higher to settle at $92.10 bbl and international benchmark Brent finished the session unchanged at $96.84 bbl. March RBOB futures added 1.45 cents to $2.7253 gallon, and front-month ULSD futures gained 1.04 cents to $2.8292 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com