Crude oil futures mixed as prices consolidate after overnight surge

Crude oil futures were mixed in mid-morning Asian trade March 24 as prices consolidated after recent gains, though oil markets remained undersupplied due to buyer aversion to Russian oil and fresh supply disruptions.

At 11 am Singapore time (0300 GMT), the ICE May Brent futures contract was up 27 cents/b (0.22%) from the previous close at $121.87/b, while the NYMEX May light sweet crude contract was down 33 cents/b (0.29%) at $114.60/b.

Oil prices had risen by around $2/b at the start of the March 24 session, extending strong overnight gains, before easing on profit-taking. Sentiment had been boosted by reports of a suspension of crude loadings at the Caspian CPC sea terminal and calls by Russian officials to switch away from the dollar and euro for Russian oil and gas trading.

Investors were also awaiting the outcome of EU and NATO talks in Brussels later March 24, with analysts maintaining that an outright EU ban on Russian energy was unlikely, though fresh sanctions on other areas should emerge.

US President Joe Biden, also in attendance at the talks, is expected to announce a fresh wave of sanctions.

"A new wave of Russian sanctions is likely, and speculation in the press has focused on the probability of sanctions affecting oil," SPI Asset Management Managing Partner Stephen Innes said in a March 24 note.

"The US and UK have already imposed bans on Russian oil, and many EU member states support a ban. Still, a few key players (notably Germany and Hungary) oppose, and a decision must be unanimous," he added.

Oil traders and market watchers said March 23 that global oil prices could spike well over $200/b in the coming months if Russia's invasion of Ukraine escalates and sidelines more oil production as the world struggles find alternative supplies.

Trafigura's head of oil trading Ben Luckock said at the FT Commodities Global Summit March 23 he sees Brent crude rising up to $150/b this summer given current market fundamentals, but accepted that prices could spike higher over $200/b given "a nasty set of circumstances".

Total US commercial crude stocks fell 2.51 million barrels in the week ended March 18 to 413.4 million barrels, the Energy Information Administration said March 23, leaving stocks 12.5% behind the five-year average for this time of year.

The draw came amid rising refinery demand and a sharp uptick in US exports.

Nationwide gasoline stocks in the US meanwhile dipped 2.95 million barrels to 238.04 million barrels in the week, while distillate stocks fell 2.07 million barrels to 112.14 million barrels.

Dubai crude swaps and intermonth spreads were higher in mid-morning Asian trade March 24 from the previous close.

The May Dubai swap was pegged at $109.04/b at 11 am Singapore time (0300 GMT), up $5.49/b (5.30%) from the March 23 Asian market close.

The April-May Dubai swap intermonth spread was pegged at $4.36/b at 11 am, up 35 cents/b over the same period, and the May-June intermonth spread was pegged at $3.28/b, up 70 cents/b.

The May Brent/Dubai Exchange of Futures for Swaps spread was pegged at $12.83/b, up $1.88/b.