Oil Markets Soared 20% This Week

Gasoline prices topped $5 a gallon in California; OPEC+ holds on modest oil output for April.

March 04, 2022

Oil Drill

ALEXANDRIA, Va.—Russia’s attack on Ukraine has caused crude oil to rise more than 20% this week, commodities prices to surge and U.S. stock futures to decline. Gasoline prices continue to march higher, up 11 cents to $3.83 a gallon today, within reach of a record $4.11 a gallon set in 2008. Today’s AAA average gasoline price topped $5 a gallon in California.

April West Texas Intermediate crude futures rose $2.41, or 2.2%, to $110.09 a barrel. Yesterday, oil fell 2.7%, to end at $107.67 a barrel after trading at a session peak of $116.57, the highest since August 2008.

This morning, May Brent crude oil, which is considered the global benchmark, climbed 3.1% to $113.81 a barrel, past a July 2014 high of $112.81 a barrel. That follow’s yesterday’s decline of $2.47, or 2.2%, to settle at $110.46 a barrel, following a session high of $119.84.

Looking at gasoline prices, California’s average price per gallon is $5.07, up from $4.94 yesterday, according to AAA. Nationally, the average price per gallon for regular grade gasoline has jumped 11 cents to $3.72. Gasoline demand, meanwhile, edged higher to 8.74 million barrels per day, up from 8.66 billion b/d, Energy Information Administration data indicate. Supply declined by 500,000 bbl to 246 million bbl last week.

Meanwhile, April natural gas prices rose 1.7% to $4.804 per million British thermal units, and April heating oil rose 0.7% to $3.5290 a gallon.

The unrest in Ukraine is raising risks for the global economy and increasing inflationary pressures through higher prices from key commodities including oil.

“Escalation of the military conflict would put Europe’s economic recovery at risk,” said Kelvin Dalrymple, senior credit officer at Moody’s. “The rest of the world will be affected by commodity price shocks at a time when inflation is already high, and by financial repercussions from the sanctions against Russia and from financial market volatility.”

U.S. stocks dropped 337 points, or 1%, just after the opening bell this morning on Wall Street. The S&P 500 also declined 0.8%, while Nasdaq Composite fell 0.6%.

Jobs Report

The U.S. Labor Department released a stronger-than-expected February jobs report today, showing the U.S. added 678,000 jobs last month, with the jobless rate dropping to 3.8%. Hourly wages climbed 5.1% over the past 12 months. Economists surveyed by Dow Jones had projected growth of 440,000 jobs and the unemployment rate to tick down to 3.9%. Hourly wages were projected to grow 5.8% year over year.

Job growth was strong across the board, led by gains in leisure and hospitality, professional and business services, health care and construction, according to the Bureau of Labor Statistics. The retail trade sector added 37,000 jobs in February, including a 5,000-job gain for gasoline stations. Retail trade employment is 104,000 higher than it was in February 2020.


OPEC+ declined to take action to cool the oil market and agreed to stick to plans for a modest crude oil output rise in April, making no mentions of the Ukrainian crisis. The producers agreed to a 400,000-barrel-a-day production increase for April, which was agreed upon last July.

“Current oil market fundamentals and the consensus on its outlook pointed to a well-balanced market, and that current volatility is not caused by changes in market fundamentals but by current geopolitical developments,” OPEC+ said in a statement.

On Wednesday, the U.S. with its allies and partners, introduced additional sanctions on Russia and Belarus, according to a statement.

“The United States will take actions to hold Belarus accountable for enabling Putin’s invasion of Ukraine, weaken the Russian defense sector and its military power for years to come, target Russia’s most important sources of wealth, and ban Russian airlines from U.S. airspace,” reads the statement.

A fire caused by Russian shelling at Europe’s largest nuclear power plant in Southern Ukraine has been extinguished, and Russian troops have moved into the facility, reports the Wall Street Journal. There are six nuclear reactors adjacent to the power plant, and none of the reactors, one of which is currently operational, were affected by the fire, and there are reportedly no radiation leaks at this point.