DTN Oil Update
WTI at $58 After US Seizures of Venezuelan Oil
SECAUCUS, N.J. (DTN) -- Oil futures settled up by almost 3% on Monday, Dec. 22, rebounding sharply from last week's multi-year lows, on reports that U.S. forces had seized in less than a fortnight a second Venezuelan oil-laden tanker while actively pursuing a third.
A Ukrainian drone attack on Russian assets in the Black Sea region and the killing of a Russian general which Moscow blamed on Kiev threatened to inflame the war between the two states. An aggressive response by the Kremlin could thwart peace efforts brokered by the U.S. between the two sides and delay the removal of Western sanctions on Russian oil.
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NYMEX WTI crude for January delivery settled up by $1.49, or 2.6%, at $58.01 bbl. Last week, January WTI hit a 2021 low of $54.89 on concerns of brightening prospects for Russia-Ukraine peace that could eventually add millions of currently sanctioned Russian barrels to an oversupplied market.
ICE Brent futures for February settled up by $1.60, or 2.7%, at $62.07 bbl. February Brent slid beneath the key $60 bbl mark last week.
Downstream, NYMEX front-month gasoline advanced by $0.034, or 2%, to close at $1.7422 gallon, after dropping below the $1.60-mark last week.
Front-month ULSD climbed by $0.0362, or 1.7%, to close at $2.1581 gallon.
Oil and fuel futures rose after news broke that U.S. forces had apprehended a Panama-flagged vessel carrying Venezuelan oil in the Caribbean on Dec. 20 and were in pursuit of another. These were in follow through to the tanker laden with Venezuelan oil seized and anchored off the Texas coast since Dec. 10.
The actions against Venezuela came after the Trump administration announced last week a naval blockade to prevent so-called sanctioned tankers from accessing oil from the Latin American nation and OPEC member. The tanker seizures have raised concerns about near-term oil supplies despite a global glut.
A Ukrainian drone attack damaged two vessels, two piers and sparked a fire in a village on the Black Sea coast in Russia's Krasnodar region, regional authorities were quoted saying on Monday. The Black Sea region is vital for Russia's energy exports.
On the trading front, NYMEX will experience some changes to its schedule this week due to the impending Christmas holiday. Oil markets will close at 1:00 p.m. EST on Dec. 24, earlier than their regular 2:30 p.m. EST schedule, and will be shut down on Dec. 25. Regular trading will commence on Dec. 26.