DTN Oil Update
ULSD, RBOB Futures Rise on Additional Russian Oil Sanctions
SECAUCUS, N.J. (DTN) -- Oil futures rallied Friday, Dec. 5, on news reports that the Group of Seven Countries (G7) and the European Union could ban all Western tankers from carrying Russian oil, a development that would affect near-term energy supplies.
Media reports said Friday that the G7 and EU were in talks to replace the $60 bbl price cap on Russian oil exports with a full maritime services ban. The new restriction could impact a third of the oil the country carried via Western tankers to Indian and Chinese refineries located mostly in India and China, the reports said.
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Traders said Russia would have to expand its fleet of non-Western shippers in the event the ban came through. They noted that Russian diesel supplies were already affected by Ukrainian strikes on refineries and by U.S. sanctions targeting Russian energy firms Rosneft and Lukoil. All this while Washington tries to find a solution to the near four-year Russia-Ukraine conflict.
"This is certainly going to further disrupt the access the world has to Russian oil, particularly at a time when global diesel supplies are already tight," said John Kilduff, a partner at New York energy hedge Again Capital.
Russia's decision to delay a quick end to the war in Ukraine unless the settlement was on its terms also contributed to the bullish sentiment in the oil futures market.
Additionally, expectations of a Federal Reserve rate cut next week also supported the rise in oil prices, which typically benefit from a boost in economic activity lent by lower interest rates. Market participants are expecting the Fed to agree to a third 25-basis point rate cut this year at the Wednesday, Dec. 10, Federal Open Market Committee.
NYMEX front-month ULSD futures rose $0.0593 to $2.3630 gallon after a session high at $2.38.
Front-month RBOB futures climbed by $0.0071 to $1.8342 gallon after rallying to $1.8515.
WTI futures for January delivery dipped $0.09 to $59.58 bbl, while ICE Brent for February rose $0.46 to $63.72 bbl.
The U.S. Dollar Index was little changed at 98.97 against a basket of foreign currencies.
