DTN Oil

MINNEAPOLIS (DTN) -- The oil market on Friday found support from the extreme cold and also due to the announcement that Russia may cut its oil output because of the recent price cap imposed on its oil sales.

Earlier this month, the U.S., Europe, and other major economies, including the United Kingdom, Japan, Canada, and Australia, agreed to a maximum $60-per-barrel price cap on Russian oil shipments, the same time that an embargo on maritime Russian oil shipments to the European Union went into force. Russian news agency TASS reported Friday that, "Russia will ban the supplies of oil and petroleum products to countries that will require compliance with the Western-imposed price ceiling, according to Deputy Prime Minister Alexander Novak in an interview aired by the Rossiya-24 TV news channel on Friday, adding that Moscow might reduce oil production at the beginning of 2023 by 500,000-700,000 barrels per day.

Once again, weakness in the March USD, down 0.1060, also supported oil futures Friday. Of course, the big news the past few days and into the weekend is the weather. John Baranick DTN Ag Meteorologist noted in his noon forecast Friday: "An arm of the polar vortex continues to swing through the country over the next couple of days with near-record low temperatures for some areas. Strong winds are creating blizzard conditions where snow cover exists. But the cold blast will be relatively brief, with temperatures rising starting Christmas Day in the west, and working east next week."

Tom Kloza, OPIS oil analyst, said on Twitter today: "OPIS now hearing of cold weather issues impacting at least a half dozen US refineries' output. Not quite Winter Storm Uri, but might crimp production of gasoline, diesel and jet fuel in rest of December. Explains why refining margins are getting wider today."

February WTI crude oil closed up $2.04 per barrel (bbl) at $79.56, and March closed up $2.22 per barrel at $79.64., with the front month hitting $80.33 for the high of the day. January RBOB was up 13.48 cents at $2.3836 and February RBOB was up 13.18 cents at $2.3915. Gasoline futures were happy to follow crude higher and moved higher due to expectations the Christmas weekend travel into next week will be a boost to gasoline demand.

Mary Kennedy can be reached at Mary.Kennedy@dtn.com

Follow her on Twitter @MaryCKenn