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Oil prices end at highest level in a month on supply risks



Oil prices settled Monday at their highest level in about a month, finding support from ongoing risks to global supplies as a rally in U.S. equities lifted prospects for the economy and energy demand.

Price moves

  • West Texas Intermediate crude for February delivery
    CL.1,
    +2.18%

    CLG24,
    +2.18%

    rose $1.78, or 2.4%, to settle at $75.19 a barrel on the New York Mercantile Exchange on the contract’s expiration day. March WTI
    CL00,
    +1.99%

    CLH24,
    +1.99%
    ,
    the most actively traded contract, added $1.51, or 2.1%, at $74.76 a barrel.

  • March Brent crude
    BRN00,
    -0.11%

    BRNH24,
    -0.11%
    ,
    the global benchmark, rose $1.50, or 1.9%, to $80.06 a barrel on ICE Futures Europe. Front-month Brent and WTI crude futures settled at their highest since Dec. 26, according to Dow Jones Market Data.

  • February gasoline
    RBG24,
    +3.53%

    added 3.5% to $2.24 a gallon, the highest finish since Nov. 29, while February heating oil
    HOG24,
    +1.35%

    climbed by 1.2% to $2.69 a gallon.

  • Natural gas for February delivery
    NGG24,
    -4.05%

    settled at $2.42 per million British thermal units, down 4%.

Market drivers

Oil traders are “starting to realize with the stock market breaking record highs that it’s unlikely that we’re going to see an economic recession,” Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch. That is “adding to demand expectations at a time when the supply situation looks to be tightening.”

“Demand is going to exceed expectations if the economy continues to grow and that’s going to leave a bigger supply deficit once we get deep into the new year,” he said.

Tensions in the Red Sea and tensions between China and Taiwan show that the risk to oil supply is “high at the same time North Dakota oil production it took a hard hit from the cold, reducing output for at least the rest of the month,” Flynn said.

There’s also a possibility they will get hit with another storm in February, he said, and it’s going to be harder for firms to increase the rig counts because of the bad weather.

“Positive risk sentiment” is also helping to fuel oil’s rise, said Fawad Razaqzada, market analyst at City Index and FOREX.com, with major U.S. indices moving toward fresh uncharted territories as the tech-fueled rally continues.

The positive risk sentiment from equity markets is “helping to boost the appetite for other risk assets, including crude oil,” he said.

Last week, WTI oil rose 1%, based on the front-month contract, while Brent eked out a 0.3% rise.

Oil’s gains last week were driven largely by the cold weather in North Dakota and other parts of the northern U.S. that resulted in production outages, analysts at…



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