U.S. crude oil spikes to a 13-year high of $130 overnight, then give up most of that gain.
In a chaotic day, oil prices gave back most of their large overnight gains, momentarily falling into negative territory after rising over $130 earlier in the morning.
Prices soared when trading started on Sunday evening, with the market responding to supply interruptions caused by Russia’s escalating invasion of Ukraine and the threat of a ban on Russian oil and natural gas.
Prices subsequently fell, owing to remarks from Germany suggesting the country is hesitant to block Russia’s energy imports, according to Rebecca Babin, a senior energy trader at CIBC Private Wealth.
“Crude is falling off the highs after statements from Germany indicating they have no intentions to block Russian energy imports, as well as hints that the US is looking into replacement barrels from Venezuela and Saudi Arabia,” she added.
“The most significant takeaway from this morning’s trading activity is that this scenario is incredibly volatile,” she continued.
West Texas Intermediate crude futures, the U.S. oil benchmark, reached a high of $130.50 on Sunday evening, the highest since July 2008, before falling down.
WTI futures temporarily fell at 9:20 a.m. ET before recovering and closing up around 4.2 percent at $120.52 per barrel.
Brent oil rose more than 5% to $124.60 a barrel, the worldwide benchmark. Brent reached a high of $139.13 overnight, its highest since July 2008.
“Oil is climbing on the potential of a comprehensive ban on Russian oil and goods,” Again Capital’s John Kilduff said. “Extremely high fuel costs will continue to rise in a startling manner.” Prices in several places may rapidly approach $5.”
The United States and its allies are contemplating an embargo on Russian oil and natural gas imports, said Secretary of State Antony Blinken on CNN’s “State of the Union” on Sunday.
“We are now talking to our European friends and allies about looking at the possibility of blocking Russian oil imports while ensuring that there is still an adequate supply of oil on international markets,” he added. “That’s a really lively debate right now.”
Meanwhile, in a letter to Democratic colleagues on Sunday evening, Speaker Nancy Pelosi said that the US House of Representatives is “exploring tough legislation” to prohibit the purchase of Russian oil, a move that would “further isolate Russia from the global economy.”
“Our bill would prohibit the importation of Russian oil and energy goods into the United States, abolish normal commercial ties with Russia and Belarus, and take the first step toward excluding Russia from membership in the World Trade Organization.” “We would also give the Executive Branch the authority to levy duties on Russian imports,” she added.
While Western sanctions have so far permitted Russia’s energy trade to continue, most importers are already shunning Russian goods. According to a JPMorgan estimate, 66% of Russian oil is unable to find consumers.
According to AAA, the average price of a gallon of petrol in the United States surpassed $4 on Sunday as a result of the violence. More than half of the cost of petrol that people put in their automobiles is accounted for by the underlying cost of oil.
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