Yahoo Finance's Jared Blikre reports on the energy market as crude oil futures settle at $110.60 a barrel.
KARINA MITCHELL: Welcome back to Yahoo Finance. Well, oil at another multiyear high today, as the conflict turns uglier in Ukraine, and as OPEC holds steady on output, announcing 400,000 barrels to be released in April if they can actually even stick to that amount that they can deliver amid tight supply. Here with more on all of this, let's bring in our Yahoo Finance's Jared Blikre.
A little bit of a surprise that they are holding steady, despite a conflict in Ukraine.
JARED BLIKRE: Well, that's right. And as you said, there's not a lot of spare capacity by some of them, although Saudi Arabia still does have a lot of spare capacity. They could increase that production if they wanted to. But 400,000 barrels increase per day was expected, and that's exactly what the market got.
Now, WTI crude futures for April settlement just closed at $110.60. Haven't seen these prices in eight years. And this is just an incredible move. I want to show a longer-term chart with candlesticks here. This is a two-month. This is where oil is starting to go parabolic. There's incredible backwardation in the futures term structure, which means there's a lot of demand for the front month contracts and not a lot for the distant month contracts.
And when we see these excesses-- and we've seen them before. I haven't seen anything like this probably since 2007-2008, when commodities peaked in their last supercycle. When this happens, you really have to be careful, because we see declining open interest. That means not as many people are in the market right now. And yet the price is going parabolic. So it just creates a very volatile, dangerous situation for traders.
And before we get to our energy stock heatmap, I just want to point out look at all this green action up here. Heating oil up 11%. Wheat up 7%. RBOB gasoline futures up 7%. So a lot going on in this space.
And let's take a look at the energy sector before we close out here. Exxon up over 2%. Chevron up over 3%. Shell up over 5%. Total, 8%. So a lot of these energy majors benefiting from this rise in price. The question is, how high is it going to go? And how low will it correct too?
KARINA MITCHELL: All right, and we'll be watching all of it. And not to mention Brent up at $112 as well.