Oil climbed as signs of a softer crude market were countered by surging premiums for fuels like gasoline and diesel, while concerns about Russian supply bolstered futures following a US crackdown on Moscow’s top two producers.
West Texas Intermediate crude rose 1.5% to settle near $61 a barrel for its third day of gains. In addition to sanctions and rising premiums for fuels, oil also likely benefited from traders covering their bearish positions, said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group.
“Crude is benefiting from several tailwinds today, with concerns around Russian supply not making its way to market as some Indian refiners have reduced purchases and analysts are increasing estimates of the potential impact,” Babin said. “There’s also some technical buying after WTI tested the $60 level and held, likely leading to a bit of short covering.”
Oil has backtracked this year after posting losses over the past three months. The prolonged slump has been driven by widespread expectations for a global surplus, with OPEC and its allies loosening output curbs just as drillers from outside the alliance also add barrels.
The premium paid for the front-month contract of West Texas Intermediate over the following month’s contract — known as the prompt spread — has narrowed to as little as 5 cents a barrel, signaling that the market expects excess supply.
Occidental Petroleum Corp. expects its targeted WTI prices to be between $55 and $60 in 2026, the company’s chief operating officer said Tuesday on an earnings call.
Still, markets for refined products have remained strong. Healthy premiums for fuel — one gauge of Europe’s diesel benchmark is the strongest since early last year — alongside wider geopolitical risks have helped keep crude prices afloat.
“It is probably fair to conclude that without strong support from refined products, crude prices would be lower,” said Tamas Varga, an analyst at brokerage PVM. “The narrowing backwardation in WTI and Brent is notable; however, unless the rug is decisively pulled out from under refined products, and it is anyone’s guess when that might happen, no major selloff in outright prices appears imminent.”
OPEC is due to release its monthly market analysis on Wednesday, with the International Energy Agency issuing an annual outlook the same day. The IEA has already forecast a record annual glut for 2026, and will update its view in a monthly snapshot on Thursday.
Oil Prices
WTI for December delivery added 1.5% to settle at $61.04 a barrel in New York.
Brent for January settlement edged up 1.7% to settle at $65.16 a barrel.
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