WTI front-month futures (CL1:COM) settled +1.8% to $109.57/bbl and Brent crude (CO1:COM) closed +1.7% to $115.09/bbl, as better than expected U.S. economic data eased some worries over a potential slowdown in energy demand.
Traders are also monitoring talks by G7 nations, who appear to be inching toward an agreement to expand sanctions against Russia by looking for a mechanism to cap the purchase price of Russian oil, raising the potential for even tighter supplies even as the G7 is expected to discuss a revival of the Iran nuclear deal, which might lead to more oil supply on the market.
Eleven of the day's top 15 gainers on the S&P 500 were in the oil and gas group: (NYSE:VLO) +8%, (DVN) +7.5%, (HES) +5.2%, (MRO) +4.8%, (HAL) +4.1%, (FANG) +3.9%, (OKE) +3.8%, (PSX) +3.5%, (BKR) +3.4%, (PXD) +3%, (EOG) +2.8%.
Meanwhile, U.S. natural gas futures (NG1:COM) finished +4.5% to $6.50/MMBtu, recouping some of its previous decline.
If the G7 implements a price cap on sale and purchase of Russian oil, "it's difficult to imagine how this is going to be implemented, especially when China and India have become Russia’s biggest customers," oil consultant Andrew Lipow told Reuters.
Energy stocks have gained for two straight sessions but had been backsliding; two weeks ago, the group posted their worst performance since the start of the pandemic.