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Crude oil futures rose Monday to settle at their highest since late October, as Ukrainian drone attacks on Russian refineries are believed to have shut down a significant portion of Russia’s refining capacity and China’s industrial production for January-February rose exceeded expectations.
“Preliminary estimates suggest that around 15% of Russia’s refining capacity has been disrupted in recent days, potentially leading to a short-term decline in crude oil exports,” says Stephen Innes of SPI Asset Management, according to Dow Jones.
The oil market was also helped by some positive economic data from China, where industrial production for the first two months of the year improved by 7% compared to the same period last year, raising the outlook for energy demand , according to XS.com analyst Samer Hasn. .
Reports that Iraq will cut its oil exports to offset overproduction in January and February also help, says Mizuho’s Robert Yawger, but “it’s the red-hot gasoline market that is driving the energy sector higher.”
Front-month Nymex crude (CL1:COM) for April delivery is out +2% at $82.72 a barrel, the highest closing value since October 27, and May Brent crude (CO1:COM) closed first month +1.8% at 86.89 dollars a barrel, the best result since October 31st.
In other energy markets, U.S. gasoline futures closed at their highest since Aug. 31, as April 1 closed (XB1:COM) +1.3% at $2.76/gal.
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Oil industry executives at the CERAWeek by S&P Global conference in Houston strongly opposed efforts to quickly transition away from fossil fuels, saying society risks paying high costs to replace oil and gas.
“We should abandon the illusion of phasing out oil and gas and instead invest in them appropriately, reflecting realistic demand assumptions, as long as they are essential,” Amin Nasser, CEO of Saudi Aramco (ARMCO), told the conference.
Other oil executives have echoed this view, with Wael Sawan of Shell (SHEL) criticizing government bureaucracy in Europe for slowing down needed development.
Oil and gas will play a role in global energy needs for a “long, long, long time to come,” Sawan said, adding that he hopes the world moves beyond a dialogue that “seems to fixate” on the notion of choosing between fossil fuels or renewables like solar and wind: “It’s everything. And we need plenty of it.”