Supply concerns and falling inventories boost Crude oil futures closed sharply higher

News on March 31, doubtful progress of Russia-Ukraine peace talks and the decline in US crude oil inventories boosted the energy market, and crude oil futures closed sharply higher
.

West Texas Intermediate crude for May delivery rose $3.
58, or 3.
4 percent, to settle at $
107.
82 a barrel on the New York Mercantile Exchange.
Tuesday closed down 1.
6%.

European ICE Brent crude oil futures for May rose 2.
9 percent to settle at $
113.
35 a barrel.

Natural gas prices rose 5.
2% to $
5.
605 per MMBtu in May.
Gasoline prices rose 3.
8 percent to $3.
325 a gallon in April and heating oil rose 2.
5 percent to $
3.
809 a gallon in April.

Oil prices recovered Tuesday's losses and have since recovered
somewhat.
Tuesday's fall came as investors pulled out commodities amid hopes for signs of progress between Russian and Ukrainian negotiators
.
According to reports, Russian Deputy Defense Minister Alexander Fomin said that Russia will reduce its military activities
in Kiev and Chernivo.

But Kremlin spokesman Dmitry Peskov said on Wednesday that Russia did not notice anything "really promising" in its proposals on Ukraine on Tuesday
.

Ukrainian President Volodymyr Zelensky and U.
S.
officials have also expressed skepticism
about whether Russia's commitment to withdraw troops means a shift.
Pentagon spokesman John Kirby said the U.
S.
found a small portion of Russian ground troops retreating from Kiev, but it looked like they were simply redeploying troops
.

Phil Flynn, senior market analyst at The Price Futures Group, said in Wednesday's market report: "Whether or not the Russia-Ukraine peace talks actually make progress, it will not change the fact that
the global crude oil market is undersupplied in any case.
" The price of crude oil can include a war premium or eliminate it, but after the smoke of gunfire clears, the crude oil market will return to a state of
insufficient supply.
”

Commerzbank analyst Carsten Fritsch said in a note to clients that the fall in crude oil prices this week, sometimes by more than 10%, makes it less
likely that OPEC+ will decide to increase production more sharply at tomorrow's meeting.
”

Analysts expect OPEC and its allies, including Russia, to stick to their plan
to increase output by another 400,000 barrels a day in May.
At a meeting last July, OPEC+ said that starting May 1, 2022, the organization's baseline production would see a small increase in some members, but the organization as a whole failed to meet its full production quota
.

DTN Senior Market Analyst Troy? Vincent said he doesn't think the revised benchmark will change the course of the
current monthly growth.
While this change in the benchmark may slightly affect the share of individual Member States in growing output in the future, it should not affect total output
.
”

Elsewhere, Poland announced a plan to stop importing oil from Russia by the end of 2022, while Germany issued an early warning on gas supplies, calling on consumers to conserve energy as Russia demanded to buy the commodity
in rubles.

The U.
S.
Energy Information Administration reported on Wednesday that U.
S.
crude inventories fell by 3.
4 million barrels in the week ended March 25, the second consecutive weekly decline
.
According to analysts in the S&P Global Commodity Watch survey, the EIA expects crude inventories to shrink by an average of 1.
7 million barrels
.
According to sources, the American Petroleum Institute reported on Tuesday that oil production fell by 3 million barrels
.
The EIA also reported an increase of 800,000 barrels per week in gasoline inventories and 1.
4 million barrels
in distillate inventories.
Weekly gasoline supplies are expected to fall by 1.
9 million barrels and distillate supplies by 1.
5 million barrels, according to analyst surveys
.

Matt Smith, Kpler's chief U.
S.
oil analyst, said both gasoline and distillate supplies rose because "implied demand for both" declined, especially for distillates
.
New York Mercantile Exchange delivery centers edged down 1 million barrels this week, while inventories in the U.
S.
Strategic Petroleum Reserve fell by 3 million barrels
, according to the U.
S.
Energy Information Administration.