Oil futures gained ground on Tuesday, underpinned by optimism over China demand, but remained on track to book losses for February.
Price action
-
West Texas Intermediate crude for April delivery
CL.1,
+2.58% CLJ23,
+2.58%
rose $1.51, or 2%, to $77.19 a barrel on the New York Mercantile Exchange. -
April Brent crude
BRNJ23,
+1.92% ,
the global benchmark, gained $1.35, or 1.6%, to trade at $83.80 a barrel on ICE Futures Europe ahead of the contract’s expiration at the end of the trading session. May Brent
BRN00,
+2.15% BRNK23,
+2.15% ,
the most actively traded contract, was up $1.35, or 1.7%, at $83.39 a barrel. -
Back on Nymex, March gasoline
RBH23,
+2.04%
was up 2% at $2.4161 a gallon, while March heating oil
HOH23,
+0.34%
added 0.3% to $2.8269 a gallon. The March contracts expire at the session’s end. -
April natural gas
NGJ23,
-2.89%
fell 1.7% to $2.685 per million British thermal units.
Market drivers
Both WTI and Brent crude were on track for monthly declines of more than 2%. Crude has been stuck in a trading range since December, with WTI trading between a bottom near $70 and highs just above $80 a barrel.
Investors continue to weigh the outlook for China demand as it reopens from COVID restrictions that had crimped demand from one of the world’s largest energy consumers. Meanwhile, Russia has moved to cut production and limit exports in response to new rounds of price caps and sanctions imposed by Western nations in response to its invasion of Ukraine just over a year ago.
Overhanging the market is uncertainty around the global economic outlook as the Federal Reserve and other major central banks continue to push interest rates higher in a bid to rein in inflation.
“The barrel of American crude remained offered into the $75 [a barrel level] yesterday, as oil bears remain in charge of the market at the current levels,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a note.
“But solid support is expected before the $70bp level, as — like it or not — the global oil supply remains tight, China reopens, demand increases and Americans will have to refill their reserves,” the analyst said.
The U.S. last year drained 180 million barrels from the Strategic Petroleum Reserve as part of an effort to combat a jump in prices after Russia’s invasion of Ukraine. The U.S. government earlier this month said it would follow through with a plan to sell another 26 million barrels of crude from the reserve.
