Crude oil futures rise on supply concerns after sanctions against Russia

Crude oil futures were higher in mid-morning Asian trade Feb. 24 as the market weighed the supply implications of targeted western sanctions against Russia and after President Vladimir Putin offered Ukraine's breakaway regions, Donetsk and Luhansk, state and military support in their conflict with Kyiv.

At 10:14 am Singapore time (0214 GMT), the ICE April Brent futures contract was up 99 cents/b (1%) from the previous close at $97.83/b, while the NYMEX April light sweet crude contract rose $1.10/b (1.19%) at $93.19/b.

"Oil traders are vigilant about a potential escalation in the conflicts that may lead to restrictions on Russia's oil exports, adding supply constraints in an already tight market," IG DailyFX strategist Margaret Yang said.

"If the Ukraine crisis deepens further, it may spiral into an energy crisis and push oil and gas prices higher," she added.

Analysts said a run towards $100/b for crude oil prices remained on the cards. An Iranian nuclear deal, while expected within days, will nonetheless still require several months for Iran to ramp up output to capacity.

"WTI crude should remain around the low-$90s until a major update with Iran nuclear deal talks or if the new Cold War leads to military conflict," OANDA's senior market analyst Edward Moya said. "Even if an Iran nuclear deal is reached, it will take months to ramp up output so even if oil drops 5%, energy traders will likely buy into that weakness."

In the US, crude oil stocks reportedly rose 5.98 million barrels for the week ended Feb. 18, according to the American Petroleum Institute, against expectations of a drop of 300,000 barrels in a survey of analysts by S&P Global Platts on Feb. 22.

If confirmed by the Energy Information Administration data out later Feb. 24, this would mark the second consecutive weekly build in crude oil stocks. Crude stocks are nonetheless still hovering near lows not seen since October 2018.

Incoming colder weather in the US are expected to keep demand for oil elevated.

In a short-range forecast published Feb. 23, the National Weather Service said the latest storm system would bring a variety of winter hazards to the Southern Plains through the Ohio Valley from Feb. 23 to Feb. 24; later moving into the Mid-Atlantic and the Northeast from Feb. 24 to Feb. 25.